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THE GEORGE AND HELEN LADD LIBRARY

BATES COLLEGE
LEWISTON, MAINE

BATES COLLEGE
LIBRARY

BATES COLLEGE

LIBRARY
l-EWiSTON. MAINE

PUBLIC PAPERS OF THE PRESIDENTS
OF THE UNITED STATES

Harry S. Truman

Containing the Public M.essagesj SpeecheSj and
Statements of the President

JANUARY I TO DECEMBER 3 I, I95O

1950

'-^^^^2^^"^

UNITED STATES GOVERNMENT PRINTING OFFICE
WASHINGTON : I965

BATES COLLEGE

LIBRARY

LEV^flSTON. MAINt

PUBLISHED BY THE

OFFICE OF THE FEDERAL REGISTER

NATIONAL ARCHIVES AND RECORDS SERVICE

GENERAL SERVICES ADMINISTRATION

.c^&°^^.

*/934.*

For sale by the Superintendent of Documents, U.S. Government Printing Office
Washington, D.C., 20402 - Price $7.75 (cloth)

FOREWORD

THE IMPORTANCE OF this series lies in the extraordinary char-
acter of the office of President of the United States.

A President's written and spoken words can command national
and international attention if he has within him the power to attract
and hold that attention. It is partly through the use of this power
that leadership arises, events are molded, and administrations take
their shape.

It is this power, quite as much as powers written into the Constitu-
tion, that gives to the papers of Presidents their peculiar and revealing
importance.

PREFACE

IN THIS VOLUME are gathered most of the public messages and
statements of the 33d President of the United States that were released
by the White House during 1950. Similar volumes are available cover-
ing 1945-1949, and the administrations of Presidents Eisenhower and
Kennedy. Volumes covering the period January i, 1951-January 20,
1953, and the period November 22, 1963-December 31, 1964, are under
preparation.

This series was begun in 1957 in response to a recommendation of
the National Historical Publications Commission. An extensive com-
pilation of the messages and papers of the Presidents, covering the
period 1789 to 1897, was assembled by James D. Richardson and pub-
lished under congressional authority between 1896 and 1899. Since
that time various private compilations were issued, but there was no
uniform, systematic publication comparable to the Congressional
Record or the United States Supreme Court Reports, Many Presi-
dential papers could be found only in mimeographed White House
releases or as reported in the press. The National Historical Publica-
tions Commission therefore recommended the establishment of an
official series in which Presidential writings and utterances of a public
nature could be made promptly available.

The Commission's recommendation was incorporated in regulations
of the Administrative Committee of the Federal Register issued under
section 6 of the Federal Register Act (44 U.S.C. 306). The Commit-
tee's regulations, establishing the series and providing for the coverage
of prior years, are reprinted at page 786 as "Appendix D."

VII

Preface

CONTENT AND ARRANGEMENT

The text of this book is based on Presidential materials issued during
1950 as White House releases and on transcripts of news conferences.
A list of White House releases from which final selections were made
is pubUshed at page 765 as "Appendix A."

The full text of President Truman's news conferences is here pub-
lished for the first time, since direct quotation of the President's replies
usually was not authorized. Addresses and speeches have been printed
as actually delivered.

Proclamations, Executive orders, and similar documents required by
law to be published in the Federal Register and Code of Federal
Regulations are not repeated. Instead, they are listed by number and
subject under the heading "Appendix B" at page 778.

The President is required by statute to transmit numerous reports
to Congress. Those transmitted during the period covered by this
volume are listed at page 785 as "Appendix C."

The items published in this volume are presented in chronological
order, rather than being grouped in classes. Most needs for a classified
arrangement are met by the subject index. For example, a reader
interested in veto messages will find them listed in the index under
the heading "veto messages."

The dates shown at the end of item headings are White House
release dates. In instances where the date of the document differs
from the release date that fact is shown in brackets immediately
following the heading. Other editorial devices, such as text notes,
footnotes, and cross references, have been supplied where needed for
purposes of clarity.

Remarks or addresses were delivered in Washington, D.C., unless

VIII

Preface

otherwise indicated. Similarly, statements, messages, and letters were
issued from the White House in Washington unless otherwise indicated.
Original source materials, where available, have been used to pro-
tect against substantive errors in transcription. In maintaining the
integrity of the text, valuable assistance was furnished by Dr. Philip C.
Brooks, Philip D. Lagerquist, and Jerry N. Hess of the Truman Library.
The planning and publication of this series is under the direction of
David C. Eberhart of the Office of the Federal Register. The editor
of the present volume was Warren R. Reid, assisted by Mildred B.
Berry. Frank H. Mortimer of the Government Printing OflSce
developed the typography and design.

Wayne C. Grover
Archivist of the United States
Lawson B. Knott, Jr.
Administrator of General Services
June 15, 1965

41-355—^5 2

CONTENTS

Page

FRONTISPIECE — Photograph courtesy of the Chicago Tribune.

FOREWORD V

PREFACE VII

LIST OF ITEMS XIII

PUBLIC PAPERS OF HARRY S. TRUMAN I

Appendix ^— White House Press Releases 765

Appendix JS— Presidential Documents Published in the Federal

Appendix C— Presidential Reports to the Congress . . . 785

Appendix D — Rules Governing This Publication .... 786

INDEX 789

LIST OF ITEMS

Page

1 Letter to the Chairman of the President's Water Resources
Policy Commission. January 3, 1950 i

2 Annual Message to the Congress on the State of the Union.
January 4, 1950 2

3 The President's News Conference of January 5, 1950 11

Statement by the President on U.S. Policy With Respect to
Formosa 11

4 Remarks at the American Federation of Labor's Samuel
Gompers Centennial Dinner. January 5, 1950 17

5 Statement by the President on the Midcentury White House
Conference on Children and Youth. January 6, 1950 18

6 Annual Message to the Congress: The President's Economic
Report. January 6, 1950 18

7 Exchange of Messages With Michael, Orthodox Archbishop

of North and South America. January 6, 1950 32

8 The President's News Conference on the Budget. January 7,
1950 32

9 Annual Budget Message to the Congress: Fiscal Year 1951.
January 9, 1950 44

10 Letter to the U.S. Representative on the United Nations Com-
mission on the Status of Women. January 10, 1950 107

11 The President's News Conference of January 12, 1950 107

xni

List of Items

Page

12 Remarks at a Supper for Democratic Senators and Repre-
sentatives. January 12, 1950 109

13 Special Message to the Congress on Synthetic Rubber. Janu-
ary 16, 1950 no

14 Remarks at a Dinner Given by the Chairmen and Directors

of Federal Reserve Banks. January 16, 1950 113

15 Remarks to a Delegation From the National Emergency Civil
Rights Mobilization Conference. January 17, 1950 115

16 The President's News Conference of January 19, 1950 115

17 Statement by the President on the Rejection by the House of
Representatives of the Korean Aid Bill. January 21, 1950 120

18 Special Message to the Congress on Tax Policy. January 23,
1950 120

19 Statement by the President on the New 75-Cent Minimum
Wage Rate. January 24, 1950 127

20 Exchange of Messages With President Prasad of India. Janu-
ary 26, 1950 129

21 Remarks to the Women's Patriotic Conference on National
Defense. January 26, 1950 129

22 Statement by the President Upon Issuing Order Providing
for the Administration of the Mutual Defense Assistance
Act. January 27, 1950 131

23 The President's News Conference of January 27, 1950 132

24 Letter Accepting Resignation of Clark M. Clifford as Special
Counsel to the President. January 27, 1950 135

XIV

List of Items

Page

25 Letter to the President of the Senate and to the Speaker of the
House on U.S. Assistance to Palestine Refugees. January 30,
1950 136

26 Statement by the President on the Hydrogen Bomb. Janu-
ary 31, 1950 138

27 Telegram to Labor and Management Leaders Proposing a
Plan for Settling the Coal Industry Dispute. January 31, 1950 138

28 Letter to the Speaker on the Panama Canal and the Panama
Railroad Company. February i, 1950 140

29 The President's News Conference of February 2, 1950 140

30 Statement by the President on the Crusade Against Heart
Disease. February 2, 1950 145

31 Remarks to a Group of Baptist Missionaries. February 3, 1950 146

32 Statement by the President on Appointing Additional Mem-
bers of the Committee on Religion and Welfare in the Armed
Forces. February 8, 1950 146

33 Letter to the Vice President Urging a Study of the Land and
Water Resources of the New England States and New York.
February 9, 1950 147

34 The President's News Conference of February 9, 1950 149

35 Letter to the Attorney General Directing Him To Petition for

an Injunction in the Coal Strike. February 11, 1950 154

36 Special Message to the Congress Transmitting Report on the
Training of Veterans Under the Servicemen's Readjustment
Act. February 13, 1950 155

Ltst of hems

Page

37 Address Before the Attorney General's Conference on Law
Enforcement Problems. February 15, 1950 156

38 The President's News Conference of February 16, 1950 159

39 Address at the Jefferson-Jackson Day Dinner. February 16,
1950 164

40 Letter to Dr. Irvin L. Stewart on the Establishment of the
President's Communications Policy Board. February 17, 1950 169

41 Remarks at a Masonic Breakfast on Washington's Birthday.
February 22, 1950 171

42 Address on Foreign Policy at the George Washington Na-
tional Masonic Memorial. February 22, 1950 171

43 Telegram to Labor and Management Leaders in the Commu-
nications Industry Urging a 60-Day Truce. February 22, 1950 176

44 The President's News Conference of February 23, 1950 177

45 Radio Remarks Opening the Red Cross Campaign. Febru-
ary 28, 1950 180

46 The President's News Conference of March 2, 1950 181

47 Letter to the Chairman, House Committee on Education and
Labor, on Federal Aid to Education. March 2, 1950 185

48 Remarks to a Group From the Ninth Annual Science Talent
Search. March 2, 1950 187

49 Special Message to the Congress on the Coal Strike. March 3,
1950 187

50 Letter to the President of the Senate and to the Speaker of the
House Transmitting Bill for the Establishment of a Commis-
sion on the Coal Industry. March 7, 1950 191

XVI

Last of Items

Page

51 Statement by the President on the Record of the Home
Owner's Loan Corporation. March 9, 1950 192

52 The President's News Conference of March 9, 1950 193

53 Special Message to the Congress Summarizing the New Re-
organization Plans. March 13, 1950 195

54 Special Message to the Congress Transmitting Reorganization
Plans I Through 13 of 1950. March 13, 1950 199

55 Special Message to the Congress Transmitting Reorganization
Plan I of 1950. March 13, 1950 203

56 Special Message to the Congress Transmitting Reorganization
Plan 2 of 1950. March 13, 1950 204

57 Special Message to the Congress Transmitting Reorganization
Plan 3 of 1950. March 13, 1950 204

58 Special Message to the Congress Transmitting Reorganization
Plan 4 of 1950. March 13, 1950 205

59 Special Message to the Congress Transmitting Reorganization
Plan 5 of 1950. March 13, 1950 205

60 Special Message to the Congress Transmitting Reorganization
Plan 6 of 1950. March 13, 1950 206

61 Special Message to the Congress Transmitting Reorganization
Plan 7 of 1950. March 13, 1950 207

62 Special Message to the Congress Transmitting Reorganization
Plan 8 of 1950. March 13, 1950 207

63 Special Message to the Congress Transmitting Reorganization
Plan 9 of 1950. March 13, 1950 207

XVII

List of hems

Page

64 Special Message to the Congress Transmitting Reorganization
Plan 10 of 1950. March 13, 1950 208

65 Special Message to the Congress Transmitting Reorganization
Plan II of 1950. March 13, 1950 208

66 Special Message to the Congress Transmitting Reorganization
Plan 12 of 1950. March 13, 1950 209

67 Special Message to the Congress Transmitting Reorganization
Plan 13 of 1950. March 13, 1950 209

68 Special Message to the Congress Transmitting Reorganization
Plan 14 of 1950. March 13, 1950 210

69 Special Message to the Congress Transmitting Reorganization
Plans 15, 16, and 17 of 1950. March 13, 1950 211

70 Special Message to the Congress Transmitting Reorganization
Plan 15 of 1950. March 13, 1950 215

71 Special Message to the Congress Transmitting Reorganization
Plan 16 of 1950. March 13, 1950 216

72 Special Message to the Congress Transmitting Reorganization
Plan 17 of 1950. March 13, 1950 216

73 Special Message to the Congress Transmitting Reorganization
Plan 18 of 1950. March 13, 1950 217

74 Special Message to the Congress Transmitting Reorganization
Plan 19 of 1950. March 13, 1950 219

75 Special Message to the Congress Transmitting Reorganization
Plan 20 of 1950. March 13, 1950 221

76 Special Message to the Congress Transmitting Reorganization
Plan 21 of 1950. March 13, 1950 223

xvin

List of Items

Page

77 Statement by the President on the National Capital Sesqui-
centennial Commission. March 15, 1950 227

78 Letter to the Chairman, House Committee on Foreign Affairs,
Urging Enactment of the Foreign Assistance Act. March 25,
1950 228

79 Letters Regarding Disclosure of Confidential Files on Em-
ployee Loyalty. March 28, 1950 229

80 The President's News Conference at Key West. March 30,
1950 232

81 Letter to Gordon Gray Regarding His Appointment as
Special Assistant to the President. April 3, 1950 238

82 Letter to Senator Tydings Again Refusing to Disclose Con-
fidential Information on Employee Loyalty. April 3, 1950 240

83 Special Message to the Congress Upon Approving Bill Relat-
ing to Cotton and Peanut Acreage Allotments and Marketing
Quotas. April 3, 1950 242

84 Special Message to the Congress on the Unemployment Insur-
ance System. April 6, 1950 244

85 Remarks of Welcome to the President of Chile at the Wash-
ington National Airport. April 12, 1950 250

86 The President's News Conference of April 13, 1950 250

87 Remarks to Members of the U.S. National Commission for
UNESCO. April 13, 1950 256

88 Veto of Bill To Amend the Natural Gas Act of 1938. April 15,
1950 257

89 Statement by the President on the Importance of Maintaining

a Bipartisan Foreign Policy. April 18, 1950 258

XIX

List of Items

Page

90 Letter to the Speaker on the PHght of Greek Children Ab-
ducted by Communist Guerrilla Forces. April 19, 1950 259

91 Statement by the President Upon Signing Bill for the Aid of
Navajo and Hopi Indian Tribes. April 19, 1950 259

92 Address on Foreign Policy at a Luncheon of the American
Society of Newspaper Editors. April 20, 1950 260

93 Special Message to the Congress Urging Extension of Rent
Control. April 21, 1950 265

94 Address at a Dinner of the Federal Bar Association. April

24, 1950 267

95 Letter to the Chairman of the President's Committee on
Religion and Welfare in the Armed Forces. April 27, 1950 272

96 Statement by the President Announcing Steps Taken To
Develop a Bipartisan Approach to Foreign PoUcy. April 27,
1950 273

97 The President's News Conference of April 27, 1950 274

98 Letter to Joseph C. Grew and General Lucius D. Clay of the
National Committee for a Free Europe. May i, 1950 278

99 Special Message to the Senate Transmitting Treaty With
Canada Concerning Uses of the Waters of the Niagara River.
May 2, 1950 279

100 Special Message to the Congress Transmitting First Report

of the War Claims Commission. May 3, 1950 281

loi Message to the United States Technical Conference on Air

Pollution. May 3, 1950 281

102 Remarks of Welcome to the Prime Minister of Pakistan at

the Washington National Airport. May 3, 1950 282

List of Items

Page

103 Statement by the President on Foreign Policy Legislation
Following a Meeting With the Chairman of the House
Foreign Affairs Committee. May 4, 1950 283

104 Exchange of Messages With the President of Chile. May 4,
1950 283

105 The President's News Conference of May 4, 1950 284

106 Special Message to the Congress on the Problems of Small
Business. May 5, 1950 288

107 Letter to the Chairman, Senate Committee on Interior and
Insular Affairs, on Statehood for Alaska and Hawaii. May

6, 1950 294

108 Statement by the President Upon Signing Bill Establishing

a Uniform Code of Military Justice. May 6, 1950 295

109 Statement by the President on the Death of President Victor
Roman y Reyes of Nicaragua. May 7, 1950 295

no Rear Platform and Other Informal Remarks in Illinois,

Iowa, and Nebraska. May 8, 1950 296

111 Address in Lincoln, Nebraska. May 8, 1950 309

112 Special Message to the Congress Transmitting Reorganiza-
tion Plan 22 of 1950. May 9, 1950 315

113 Special Message to the Congress Transmitting Reorganiza-
tion Plan 23 of 1950. May 9, 1950 316

114 Special Message to the Congress Transmitting Reorganiza-
tion Plan 24 of 1950. May 9, 1950 318

115 Special Message to the Congress Transmitting Reorganiza-
tion Plan 25 of 1950. May 9, 1950 320

XXI

List of Items

Page

ii6 Address in Casper, Wyoming. May 9, 1950 321

117 Rear Platform Remarks in Wyoming. May 9, 1950 327

118 Address in Cheyenne, Wyoming. May 9, 1950 329

119 Address in Laramie, Wyoming. May 9, 1950 333

120 Statement by the President Upon Signing Bill Creating the
National Science Foundation. May 10, 1950 338

121 Rear Platform and Other Informal Remarks in Idaho, Ore-
gon, and Washington. May 10, 1950 339

122 Address in Pendleton, Oregon. May 10, 1950 358

123 Telegram to the President of the Senate Concerning Reor-
ganization Plan 12 of 1950. May 11, 1950 363

124 Rear Platform and Other Informal Remarks in Washington,
Idaho, and Montana. May 11, 1950 364

125 Address at the Dedication of the Grand Coulee Dam. May

II, 1950 369

126 Address in Spokane at Gonzaga University. May 11, 1950 374

127 Rear Platform Remarks in Montana. May 12, 1950 377

128 Address in Butte, Montana. May 12, 1950 387

129 Rear Platform and Other Informal Remarks in Montana,
North Dakota, and Minnesota. May 13, 1950 391

130 Address in Fargo, North Dakota. May 13, 1950 399

131 Rear Platform and Other Informal Remarks in Wisconsin.
May 14, 1950 404

xxn

LisS of hems

Page

132 Address at the Dedication of the Credit Union National As-
sociation's Filene House, Madison, Wisconsin. May 14, 1950 405

133 Radio Remarks Opening the Savings Bond Drive. May 15,
1950 408

134 Address in Chicago at the National Democratic Conference
and Jefferson Jubilee. May 15, 1950 409

135 Rear Platform Remarks at Cumberland, Maryland. May 16,
1950 414

136 Address on the Occasion of the Publication of the First Vol-
ume of the Jefferson Papers. May 17, 1950 416

137 The President's New^s Conference of May 18, 1950 418

Statement by the President Concerning the Proposed Pool-
ing of the French and German Steel and Coal Industries 418

138 Remarks at the Armed Forces Dinner. May 19, 1950 423

139 Remarks at the Democratic Women's National Council Din-
ner. May 20, 1950 425

140 Special Message to the Congress Following the Signing of

the Rivers and Harbors Bill. May 22, 1950 427

141 Statement by the President in Response to the Report of the
Committee on Equality of Treatment and Opportunity in

the Armed Services. May 22, 1950 431

142 Letters of Appreciation on the Third Anniversary of the
Greek-Turkish Aid Program. May 22, 1950 432

143 Message to the Congress Transmitting the Fourth Annual
Report on U.S. Participation in the United Nations. May 22,
1950 433

xxni

List of Items

Page

144 Remarks to Delegates to the Fifth Annual Conference on
Citizenship. May 23, 1950 436

145 Remarks to a Group From the Ohio Farm Bureau. May 24,
1950 437

146 The President's News Conference of May 25, 1950 438

147 Joint Declaration With the United Kingdom and France

on the Arab States and Israel. May 25, 1950 441

148 Statement by the President on the Joint Declaration on the
Near East. May 25, 1950 442

149 Special Message to the Congress Transmitting Reorganiza-
tion Plan 26 of 1950. May 31, 1950 442

150 Special Message to the Congress Transmitting Reorganiza-
tion Plan 27 of 1950. May 31, 1950 443

151 Special Message to the Congress on Military Aid. June i,
1950 445

152 The President's News Conference of June i, 1950 449

153 White House Statement Announcing the Establishment of
the President's Commission on Migratory Labor. June 3,
1950 452

154 Statement by the President Upon Signing the Foreign Eco-
nomic Assistance Act. June 5, 1950 453

155 Address Before the President's Conference on Industrial
Safety. June 5, 1950 455

156 Statement by the President Upon Appointing a Committee

To Review Veterans Hospitals. June 5, 1950 458

XXIV

List of hems

Page

157 Address at a Dinner of the Better Business Bureaus. June 6,
1950 458

158 Remarks at the 91st Annual National Convention of the
Augustana Lutheran Church. June 7, 1950 463

159 Commencement Address at the University of Missouri.
June 9, 1950 464

160 Rear Platform and Other Informal Remarks in Missouri.
June 9, 1950 468

161 Informal Remarks in St. Louis in Connection With the 30th
Reunion of the 35th Division Association. June 10, 1950 470

162 Address in St. Louis at the Site of the Jefferson National
Expansion Memorial. June 10, 1950 473

163 Remarks to the National Association of Radio Farm Direc-
tors. June 12, 1950 477

164 White House Statement Announcing the Estabhshment of
the Arkansas-White-Red River Basins Inter-Agency Com-
mittee. June 14, 1950 478

165 Remarks at the U.S. Marine Corps Base, Quantico, Virginia.
June 15, 1950 478

166 Veto of Bill To Define the Application of the Federal Trade
Commission Act and the Clayton Act to Certain Pricing
Policies. June 16, 1950 480

167 Statement by the President Upon Signing Bill Amending

the Displaced Persons Act. June 16, 1950 483

168 Memorandum to Department and Agency Heads Request-
ing Their Cooperation With the Senate Special Crime
Investigating Committee. June 17, 1950 484

XXV

List of Items

Page

i6g The President's News Conference of June 22, 1950 485

170 Veto of Bill Relating to the Promotion of Veterans of World
War II in the Field Service of the Post Office Department.
June 23, 1950 487

171 Address in Baltimore at the Dedication of Friendship Inter-
national Airport. June 24, 1950 489

172 Statement by the President on the Violation of the 38th
Parallel in Korea. June 26, 1950 491

173 Statement by the President on the Situation in Korea. June

27, 1950 492

174 Address at the Laying of the Cornerstone of the new U.S.
Courts Building for the District of Columbia. June 27, 1950 493

175 Exchange of Messages With Governor Dewey Concerning
U.S. Action in Korea. June 27, 1950 496

176 Remarks to Members of Reserve OflScers Association. June

28, 1950 496

177 Address Before the Annual Convention of the American
Newspaper Guild. June 28, 1950 498

178 Remarks to the Washington Student Citizenship Seminar.
June 28, 1950 502

179 The President's News Conference of June 29, 1950 502

180 Statement by the President Announcing an Economic Sur-
vey Mission to the Philippines. June 29, 1950 506

181 Exchange of Messages With the Presidents of Costa Rica, the
Dominican Republic, Nicaragua, and Colombia Concern-
ing the U.S. Decision on Korea. June 29, 1950 507

XXVI

List of hems

Page

182 Veto of Bill To Amend the Hatch Act. June 30, 1950 509

183 Veto of Bill To Amend the War Contractors Relief Act.
June 30, 1950 510

184 White House Statement Following a Meeting Between the
President and Top Congressional and Military Leaders To
Review the Situation in Korea. June 30, 1950 513

185 Address at Valley Forge at the Boy Scout Jamboree. June 30,
1950 513

186 The President's News Conference of July 6, 1950 516

187 Statement by the President Regarding a Request for Supple-
mental Appropriations for the Atomic Energy Commission.
July 7, 1950 519

188 Statement by the President Upon Issuing Order Averting a
Railroad Strike. July 8, 1950 519

189 Statement by the President Announcing the Designation of
General MacArthur To Lead the Allied Military Forces in
Korea. July 8, 1950 520

190 Letter to the Speaker on the Need for an Expanded Truth
Campaign To Combat Communism. July 13, 1950 521

191 The President's News Conference of July 13, 1950 522

192 Letters to Agency Heads on the Need for Restricting Hous-
ing Credit. July 18, 1950 525

193 Special Message to the Congress Reporting on the Situation

in Korea. July 19, 1950 527

194 Radio and Television Address to the American People on

the Situation in Korea. July 19, 1950 537

xxvii

List of Items

Page

195 Statement by the President on the Appointment of Charles
M. Spoflord as Deputy U.S. Representative to the North
Atlantic Council. July 20, 1950 542

196 Letter to Agency Heads Directing a Review of Government
Programs. July 21, 1950 543

197 Message to Dr. Daniel A. Poling, President of the World's
Christian Endeavor Union. July 21, 1950 544

198 Statement by the President on the Death of Mackenzie King.
July 23, 1950 544

199 Statement by the President on Reporting Information Re-
lating to Espionage, Sabotage, and Subversive Activities.
July 24, 1950 545

200 Letter to the Chairman, Senate Committee on Finance, on

the Need for an Increase in Taxes. July 25, 1950 545

201 Statement by the President Upon Signing Bill Continuing

the Military Aid Program. July 26, 1950 547

202 Special Message to the Congress: The President's Midyear
Economic Report. July 26, 1950 548

203 The President's News Conference of July 27, 1950 560

204 Letter to the Speaker Transmitting Supplemental Estimate

of Appropriations for Military Assistance. August i, 1950 564

205 Letter to Committee Chairmen on the Defense Production
Bill. August I, 1950 566

206 The President's News Conference of August 3, 1950 568

207 Special Message to the Congress on the Internal Security of

the United States. August 8, 1950 571

xxvni

List of Items

Page

208 Remarks to the President's Committee on National Employ

the Physically Handicapped Week. August 9, 1950 577

209 The President's News Conference of August 10, 1950 579

210 Veto of Bill Relating to the Census in South Parkersburg,
West Virginia. August 11, 1950 583

211 Message to President Syngman Rhee on the Second Anni-
versary of the Republic of Korea. August 14, 1950 584

212 Statement by the President on the looth Anniversary of the
Death of General Jose de San Martin. August 16, 1950 584

213 Letter to the Chairman, Senate Committee on Public Works,

on the Federal-Aid Highway Bill. August 17, 1950 585

214 The President's News Conference of August 17, 1950 586

215 Letter to the President of the Senate on the Defense Produc-
tion Bill. August 185 1950 589

216 Veto of Bill To Amend the War Contractors Relief Act.
August 21, 1950 590

217 The President's News Conference of August 24, 1950 592

218 Statement by the President Upon Nominating Walter J.
Donnelly as Minister and U.S. High Commissioner for
Austria. August 24, 1950 595

219 Statement by the President Upon Nominating U.S. Repre-
sentatives to the Fifth Session of the U.N. General Assembly.
August 24, 1950 596

220 Letter to the Speaker on the Appropriation for Foreign Aid.
August 25, 1950 596

XXIX

List of Items

Page

221 Statement by the President Upon Issuing Order Taking Con-
trol of the Nation's Railroads. August 25, 1950 597

222 Letter to the Chairman, Senate Committee on Foreign Rela-
tions, Urging Early Ratification of the Genocide Convention.
August 26, 1950 598

223 Letter to Ambassador Warren Austin Restating the U.S.
Position on Formosa. August 27, 1950 599

224 Statement by the President Upon Signing the Social Security
Act Amendments. August 28, 1950 600

225 Letter to Committee Chairmen on Universal Military Train-
ing. August 29, 1950 601

226 Message to General MacArthur Regarding the Withdrawal
of the General's Message to the Veterans of Foreign Wars.
August 29, 1950 602

227 Letter to Senator Flanders on the Appropriation for the
Campaign of Truth. August 30, 1950 602

228 Statement by the President: Labor Day. August 31, 1950 604

229 Letter to the General Chairman of the President's Highway
Safety Conference. August 31, 1950 605

230 The President's News Conference of August 31, 1950 606

231 Letter to the Ambassador of Chile on the U.S. Excise Tax on
Copper. September i, 1950 608

232 Radio and Television Report to the American People on the
Situation in Korea. September i, 1950 609

233 Veto of Bill Relating to Spanish-American War Veterans.
September 6, 1950 614

XXX

Ust of Items

Page

234 Statement by the President Upon Signing the General Ap-
propriation Act. September 6, 1950 616

235 Letters to the Commandant of the Marine Corps League and

to the Commandant of the Marine Corps. September 6, 1950 617

236 Statement by the President Upon Signing Bill Regarding
Marine War-Risk Insurance. September 7, 1950 618

237 Remarks to Members of the Marine Corps League. Septem-
ber 7, 1950 619

238 The President's News Conference of September 7, 1950 619

239 Remarks to the National Citizens' Committee for United
Nations Day. September 7, 1950 623

240 Statement by the President Upon Signing Order Concern-
ing the Point 4 Program. September 8, 1950 623

241 Veto of Bill To Amend the Nationality Act of 1940, as
Amended. September 9, 1950 624

242 Statement by the President Upon Approving an Increase in
U.S. Forces in Western Europe. September 9, 1950 626

243 Radio and Television Address to the American People Fol-
lowing the Signing of the Defense Production Act. Sep-
tember 9, 1950 626

244 Statement by the President Upon Signing the Budget and
Accounting Procedures Act. September 12, 1950 631

245 Letter Accepting Resignation of Louis Johnson as Secretary

of Defense. September 12, 1950 632

246 Letter to Committee Chairmen Transmitting Bill To Permit
General Marshall To Serve as Secretary of Defense. Sep-
tember 13, 1950 633

XXXI

List of Items

Page

247 Remarks to the National Association of Postal Supervisors.
September 13, 1950 634

248 Statement by the President Upon Signing Bill Establishing

a New Grand Teton National Park. September 14, 1950 635

249 Letter to Senator Thomas on the Distribution of Surplus
Perishables to Welfare and ReUef Agencies. September 14,
1950 636

250 The President's News Conference of September 14, 1950 637
Statement by the President on the Japanese Peace Treaty 637

251 Special Message to the Congress Transmitting a Report of

the National Security Resources Board. September 18, 1950 641

252 Letter to Committee Chairmen on the Wherry Amendment
to the Supplemental Appropriations Bill. September 20,
1950 641

253 The President's News Conference of September 21, 1950 643

254 Veto of the Internal Security Bill. September 22, 1950 645

255 Recorded Address for Broadcast on Democratic Women's
Day. September 27, 1950 653

256 Memorandum of Disapproval of Bill Relating to a Claim of
the Board of County Commissioners of Sedgwick County,
Kansas. September 28, 1950 655

257 Memorandum of Disapproval of Bill To Amend the Mer-
chant Ship Sales Act of 1946. September 28, 1950 656

258 The President's News Conference of September 28, 1950 657

259 Memorandum on the Need for Protecting Free Enterprise
During the Defense Emergency. September 29, 1950 661

XXXII

List of Items

Page

260 Message Congramlating General MacArthur on the Liber-
ation of Seoul. September 29, 1950 662

261 Letter to the Vice President on the Need for Repatriating
Displaced Greek Children. September 29, 1950 663

262 Radio Remarks Opening the Community Chest Campaign.
September 29, 1950 663

263 Remarks Upon Awarding the Congressional Medal of
Honor to Maj. Gen. William F. Dean. September 30, 1950 664

264 Statement by the President on His Forthcoming Meeting
With General MacArthur. October 10, 1950 665

265 Letter Concerning the Establishment of an Interagency
Committee To Study the Resources and Development of
New England and New York. October ii, 1950 666

266 Remarks in St. Louis at the Installation of Mary Jane Tru-
man as Worthy Grand Matron, Order of the Eastern Star

for Missouri. October 11, 1950 669

267 Remarks in Pearl Harbor at the Commissioned Officers
Mess. October 13, 1950 670

268 Statement by the President on His Meeting With General
MacArthur at Wake Island. October 15, 1950 672

269 Address in San Francisco at the War Memorial Opera House.
October 17, 1950 673

270 The President's News Conference of October 19, 1950 679

271 Address in New York City Before the United Nations Gen-
eral Assembly. October 24, 1950 683

272 Remarks to Members of the National Guard Association.
October 25, 1950 687

41-355—65 3 XXXIII

List of Items

Page

273 The President's News Conference of October 26, 1950 689

274 Letter to General Geoffrey Keyes, Retiring U.S. High Com-
missioner in Austria. October 30, 1950 692

275 Remarks in Arlington Cemetery at the Unveiling of the
Statue of Sir John Dill. November i, 1950 693

276 Statement by the President on the Death of George Bernard
Shaw. November 2, 1950 694

277 Message to the Governor of Puerto Rico Regarding the
Recent Uprisings. November 2, 1950 694

278 The President's News Conference of November 2, 1950 694

279 Address in Kiel Auditorium, St. Louis. November 4, 1950 697

280 Remarks in Independence at the Liberty Bell Luncheon.
November 6, 1950 703

281 Address in Independence at the Dedication of the Liberty
Bell. November 6, 1950 704

282 Statement by the President in Response to the Gray Report

on Foreign Economic Policy. November 12, 1950 707

283 Letter to the Chairman, Civil Service Commission, Upon
Signing Order Establishing Special Personnel Procedures in
the Interest of the National Defense. November 13, 1950 708

284 Letter to Committee Chairmen on Taxation of Excess
Profits. November 14, 1950 709

285 Statement by the President Urging Support of the CARE-
for-Korea Campaign. November 14, 1950 710

286 Statement by the President on the Christmas Seal Campaign.
November 16, 1950 711

XXXIV

List of Items

Page

287 The President's News Conference of November 16, 1950 711

. . Statement by the President on the Chinese Intervention in
Korea 711

288 Memorandum Limiting the Number of Supergrade Posi-
tions in Defense Agencies. November 21, 1950 716

289 Letter to the Chairman, Advisory Board on International
Development, on Foreign Economic Policy. November 24,
1950 717

290 Letter to Committee Chairmen on Aid to Yugoslavia. No-
vember 24, 1950 718

291 Letter to the President of the Senate on Statehood for Hawaii
and Alaska. November 27, 1950 719

292 Letter to Committee Chairmen Recommending Extension

of Rent Control. November 27, 1950 720

293 Special Message to the Congress Urging Legislation Author-
izing Further Assistance to Yugoslavia. November 29, 1950 721

294 Statement by the President on the Advisory Board on Inter-
national Development. November 29, 1950 723

295 The President's News Conference of November 30, 1950 724
Statement by the President on the Chinese Invasion in Korea 724

296 Special Message to the Congress Requesting Additional Ap-
propriations for Defense. December i, 1950 728

297 Statement by the President Making Public a Report Entitled
"The Military Chaplaincy." December i, 1950 732

298 Letter to the President of the Senate and to the Speaker of
the House on Vocational Rehabilitation of Disabled Vet-
erans. December 4, 1950 732

XXXV

List of hems

Page

299 Address Before the Midcentury White House Conference

on Children and Youth. December 5, 1950 733

300 Statement by the President on the Death of Charles G. Ross.
December 5, 1950 737

301 Joint Statement Following Discussions With the Prime Min-
ister of Great Britain. December 8, 1950 738

302 White House Statement Concerning a Meeting With the
Congressional Leaders To Discuss the National Emergency.
December 13, 1950 741

303 Radio and Television Report to the American People on the
National Emergency. December 15, 1950 741

304 Proclamation 2914: Proclaiming the Existence of a National
Emergency. December 16, 1950 746

305 Statement by the President on Secretary Acheson's Attend-
ance at the Council Meetings of the North Atlantic Treaty
Powers. December 17, 1950 747

306 Statement by the President Making Public a Report by the
Water Resources Policy Commission. December 17, 1950 748

307 Letter to the President of the Senate and to the Speaker of
the House Asking for Additional Emergency Legislation.
December 18, 1950 749

308 Message to the Secretary of State Designating General Eisen-
hower as Supreme Allied Commander, Europe. Decem-
ber 19, 1950 750

309 The President's News Conference of December 19, 1950 751
. . Statement by the President in Support of Secretary Acheson 751

XXXVI

L/V/ of Items

Page

310 Letter to General Eisenhower on His Designation as Su-
preme Allied Commander in Europe. December 19, 1950 754

311 Statement by the President Following a Report by Secretary
Acheson on His Meeting With the Ministers of the North
Atlantic Treaty Nations. December 21, 1950 755

312 Remarks in Kansas City at a Dinner of the Knights of the
Red Cross of Constantine. December 22, 1950 756

313 Remarks in Kansas City at a Luncheon for the Press. De-
cember 23, 1950 757

314 Remarks in Grandview, Missouri, at a Meeting of the Order

of the Eastern Star. December 23, 1950 758

315 Remarks at the Dedication Services of the Grandview Bap-
tist Church. December 24, 1950 758

316 Recorded Message for Broadcast on World Day of Prayer.
December 24, 1950 759

317 Address Recorded for Broadcast on the Occasion of the
Lighting of the National Community Christmas Tree on the
White House Grounds. December 24, 1950 759

318 The President's News Conference of December 28, 1950 760

319 Statement by the President Upon Signing Bill Amending

the Clayton Act. December 29, 1950 763

320 Letter to the President of the Senate and to the Speaker of
the House Recommending the Posthumous Appointment of
General Walker to the Grade of General in the Army of the
United States. December 29, 1950 763

XXXVII

Hany S. Truman
1950

I Letter to the Chairman of the President's Water Resources
Policy Commission. January 3, 1950

Dear Mr, Coo\e:

For more than a century, the Federal Gov-
ernment has played a vital role in harnessing
our water resources and converting them to
the beneficial and productive use of the
Nation.

Over this period our v^ater resources pol-
icies have been constantly modified and ad-
justed to meet the emerging needs of our
complex and dynamic society. It has not
alv^^ays been possible, however, to decide in-
dividual changes in policy in the light of
broad national objectives. Frequendy, new
policies which have been developed to meet
specific situations or to solve particular so-
cial and economic needs existing at the time
have produced inconsistencies in our na-
tional water resources policies.

Within the past several years the need for
careful review and reappraisal of our na-
tional water resources policies and related
land use problems has become increasingly
apparent. On several occasions, during the
recent session of Congress, I called attention
to the need for developing a consistent and
comprehensive policy with regard to our
whole water resources program. In many
cases, piece-meal or partial approaches to
a problem as broad as water resources de-
velopment tend to confuse, rather than clar-
ify, many of the basic, underlying issues.
It is essential in my judgment that a compre-
hensive study and review be made of all
existing water resources legislation and pol-
icies and that recommendations be made in
the full knowledge of national needs and
objectives.

Therefore, I am creating by Executive
order a temporary Water Resources Policy
Commission of seven members to study and
to make recommendations to me on the pol-

icies which should be followed by the Fed-
eral Government in fulfilling its proper
responsibilities for the development, conser-
vation and use of the Nation's water
resources.

I am asking you to serve as chairman of
this Commission. Because of the need for
early action in the field of water resources
development, I am requesting the Commis-
sion to submit its final report to me not later
than December i, 1950.

In asking you and your fellow members
of the Commission to undertake this highly
diflScult assignment, I cannot stress its im-
portance too gready.

The Federal Government already has a
substantial investment in existing water re-
sources improvements; in recent years we
have been adding to this investment at a rate
of more than $1 billion annually. These
facts alone make it imperative that indi-
vidual projects be properly related to the
total water resources program, that they be
undertaken in logical and orderly sequence
and that they be scheduled to conform to
fiscal and other national considerations. It
is even more important, however, that the
policies underlying these programs be
soundly conceived in terms of national needs
and objectives and that they are adopted
in the light of our goal of a stable and ex-
panding national economy.

While the number of individual issues in
the water resources field is large, I hope that
the Commission will devote its attention to
major areas of immediate importance and
to those special aspects of resource develop-
ment programs which have a major im-
mediate effect on the well-being and proper
functioning of the Nation's economy.

The Executive order establishing the

41-355—65-

[i] Jan. 3

Public Papers of the Presidents

Water Resources Policy Commission states
that the Commission shall give consideration
in particular to (a) the extent and character
of Federal Government participation in
major water resources programs, (b) an
appraisal of the priority of water resources
programs from the standpoint of economic
and social need, (c) criteria and standards
for evaluating the feasibility of such projects,
and (d) desirable legislation or changes in
existing legislation.

These all represent areas in which there
is pressing need for clarification of our na-
tional policies and responsibilities.

In requesting the Commission to under-
take this highly difficult and important as-
signment, I recognize that it will not be pos-
sible to formulate recommendations on all of
the current issues before us in time for con-
sideration in the forthcoming session of the
Congress; however, much basic work has
already been done within the Government
and elsewhere with respect to many issues
involved in our water resources program. It
is my hope, therefore, that it will be possible
for the Commission to submit interim recom-
mendations to me on some of the more ur-
gent issues which have been raised in order
that specific proposals can be submitted to
the Congress in time for action this year.

As you know, the Commission on the Or-
ganization of the Executive Branch of the
Government has made a detailed and com-
prehensive study of the organizational is-
sues involved in the water resources field.

The proper allocation of functions among
agencies, the means for coordinating their
efforts and the merits of various alterna-
tives for coordination of river basin develop-
ment programs are now under active con-
sideration in the Executive Branch. I have
already made certain recommendations to
the Congress in these areas and expect to
transmit others during the coming months.
While problems of organization are closely
related to the development of consistent poli-
cies in the field of water resources, I am re-
questing your Commission to confine its
recommendations to the questions of policy
set forth in the Executive order together with
related legislation.

Very sincerely yours,

Harry S. Truman

[Honorable Morris L. Cooke, St. Georges Road,
Mt. Airy P.O., Philadelphia 19, Pennsylvania.]

note: The President's Water Resources Policy Com-
mission was established by Executive Order 10095
of January 3, 1950 (3 CFR, 1 949-1 953 Comp., p.
291).

On the same day the President appointed the fol-
lowing members: Morris L. Cooke, engineer, Phila-
delphia, Pa., chairman; R. R. Renne, president,
Montana State College; Lewis W. Jones, president.
University of Arkansas; Gilbert White, president,
Haverford College; Samuel B. Morris, Department
of Water and Power, Los Angeles, Calif.; Paul S.
Burgess, dean. College of Agriculture, University of
Arizona; and Leland D. Olds, New York City.

The Commission's report was contained in three
volumes. Volume i, entided "A Water Policy for
the American People (General Report)," was sub-
mitted to the President on December 11, 1950 (see
Item 306).

2 Annual Message to the Congress on the State of the Union.
]anuary 4, 1950

[ As delivered in person before a joint session ]

Mr. President, Mr. Speaker, Members of the
Congress:

A year ago I reported to this Congress that
the state of the Union was good. I am

happy to be able to report to you today that
the state of the Union continues to be good.
Our Republic continues to increase in the
enjoyment of freedom within its borders,

Harry S. Truman, ig^o

Jan. 4 [2]

and to offer strength and encouragement to
all those who love freedom throughout the
world.

During the past year we have made nota-
ble progress in strengthening the foundations
of peace and freedom, abroad and at home.

We have taken important steps in secur-
ing the North Atlantic community against
aggression. We have continued our suc-
cessful support of European recovery. We
have returned to our established policy of
expanding international trade through re-
ciprocal agreement. We have strengthened
our support of the United Nations.

While great problems still confront us,
the greatest danger has receded — ^the pos-
sibility which faced us 3 years ago that most
of Europe and the Mediterranean area might
collapse under totalitarian pressure. Today,
the free peoples of the world have new
vigor and new hope for the cause of peace.

In our domestic affairs, we have made
notable advances toward broader oppor-
tunity and a better life for all our citizens.

We have met and reversed the first sig-
nificant downturn in economic activity since
the war. In accomplishing this, Govern-
ment programs for maintaining employment
and purchasing power have been of tremen-
dous benefit. As the result of these pro-
grams, and the wisdom and good judgment
of our businessmen and workers, major re-
adjustments have been made without wide-
spread suffering.

During the past year, we have also made
a good start in providing housing for low-
income groups; we have raised minimum
wages; we have gone forward with the de-
velopment of our natural resources; we have
given a greater assurance of stability to the
farmer; and we have improved the organi-
zation and eflSciency of our Government.

Today, by the grace of God, we stand a
free and prosperous nation with greater pos-
sibilities for the future than any people ever

had before in the history of the world.

We are now, in this year of 1950, nearing
the midpoint of the 20th century.

The first half of this century will be
known as the most turbulent and eventful
period in recorded history. The swift pace
of events promises to make the next 50 years
decisive in the history of man on this planet.

The scientific and industrial revolution
which began two centuries ago has, in the
last 50 years, caught up the peoples of the
globe in a common destiny. Two world-
shattering wars have proved that no corner
of the earth can be isolated from the affairs
of mankind.

The human race has reached a turning
point. Man has opened the secrets of nature
and mastered new powers. If he uses them
wisely, he can reach new heights of civiliza-
tion. If he uses them foolishly, they may
destroy him.

Man must create the moral and legal
framework for the world which will insure
that his new powers are used for good and
not for evil. In shaping the outcome, the
people of the United States will play a
leading role.

Among all the great changes that have
occurred in the last 50 years, none is more
important than the change in the position
of the United States in world affairs. Fifty
years ago we were a country devoted largely
to our own internal affairs. Our industry
was growing, and we had new interests in
the Far East and in the Caribbean, but we
were primarily concerned with the develop-
ment of vast areas of our own continental
territory.

Today, our population has doubled. Our
national production has risen from about $50
billion, in terms of today's prices, to the
staggering figure of $255 billion a year. We
have a more productive economic system and
a greater industrial potential than any other
nation on the globe. Our standard of living

[2] Jan. 4

Public Papers of the Presidents

is an inspiration for all other peoples. Even
the slightest changes in our economic and
social life have their effect on other countries
all around the world.

Our tremendous strength has brought with
it tremendous responsibilities. We have
moved from the outer edge to the center of
world affairs. Other nations look to us for
a wise exercise of our economic and mili-
tary strength, and for vigorous support of the
ideals of representative government and a
free society. We will not fail them.

Our objective in the world is peace. Our
country has joined with others in the task of
achieving peace. We know now that this is
not an easy task, or a short one. But we are
determined to see it through. Both of our
great political parties are committed to work-
ing together — ^and I am sure they will con-
tinue to work together — to achieve this end.
We are prepared to devote our energy and
our resources to this task, because we know
that our own security and the future of man-
kind are at stake.

Right here, I want to say that no one
appreciates more than I the bipartisan co-
operation in foreign affairs which has been
enjoyed by this administration.

Our success in working with other na-
tions to achieve peace depends largely on
what we do at home. We must preserve
our national strength. Strength is not sim-
ply a matter of arms and force. It is a matter
of economic growth, and social health, and
vigorous institutions, public and private. We
can achieve peace only if we maintain our
productive energy, our democratic institu-
tions, and our firm belief in individual free-
dom.

Our surest guide in the days that lie ahead
will be the spirit in which this great Re-
public was founded. We must make our
decisions in the conviction that all men
are created equal, that they are equally en-
tided to life, liberty, and the pursuit of

happiness, and that the duty of government
is to serve these ends.

This country of ours has experienced many
blessings, but none greater than its dedica-
tion to these principles. At every point in
our history, these ideals have served to cor-
rect our failures and shortcomings, to spur
us on to greater efforts, and to keep clearly
before us the primary purpose of our exist-
ence as a nation. They have enshrined for us,
a principle of government, the moral impera-
tive to do justice, and the divine command to
men to love one another.

These principles give meaning to all that
we do.

In foreign policy, they mean that we can
never be tolerant of oppression or tyranny.
They mean that we must throw our weight
on the side of greater freedom and a better
life for all peoples. These principles con-
firm us in carrying out the specific programs
for peace which we have already begun.

We shall continue to give our whole-
hearted support to the United Nations. We
believe that this organization can ultimately
provide the framework of international law
and morality without which mankind can-
not survive. It has already set up new stand-
ards for the conduct of nations in the Decla-
ration of Human Rights and the Conven-
tion on Genocide. It is moving ahead to
give meaning to the concept of world
brotherhood through a wide variety of cul-
tural, economic, and technical activities.

The events of the past year again showed
the value of the United Nations in bringing
about the peaceful adjustment of tense inter-
national controversies. In Indonesia and in
Palestine the efforts of the United Nations
have put a stop to bloodshed and paved the
way to peaceful settlements.

We are working toward the time when
the United Nations will control weapons of
mass destruction and will have the forces to
preserve international law and order. While

Harry S. Truman, ig^o

Jan. 4 [2]

the world remains unsettled, however, and
as long as our own security and the security
of the free world require, we will maintain
a strong and well-balanced defense organi-
zation. The Selective Service System is an
essential part of our defense plans, and it
must be continued.

Under the principles of the United Nations
Charter we must continue to share in the
common defense of free nations against ag-
gression. At the last session this Congress
laid the basis for this joint effort. We now
must put into effect the common defense
plans that are being worked out.

We shall continue our efforts for world
economic recovery, because world prosper-
ity is the only sure foundation of a perma-
nent peace.

As an immediate means to this end we
must continue our support of the European
recovery program. This program has
achieved great success in the first 2 years of
its operation, but it has not yet been com-
pleted. If we were to stop this program
now, or cripple it, just because it is succeed-
ing, we should be doing exactly what the
enemies of democracy want us to do. We
should be just as foolish as a man who, for
reasons of false economy, failed to put a roof
on his house after building the foundation
and the walls.

World prosperity also requires that we do
all we can to expand world trade. As a
major step in this direction we should
prompdy join the International Trade Or-
ganization. The purpose of this organiza-
tion, which the United States has been fore-
most in creating, is to establish a code of fair
practice, and an international authority for
adjusting differences in international com-
mercial relations. It is an effort to prevent
the kind of anarchy and irresponsibility in
world trade which did so much to bring
about the world depression of the 1930's.

An expanding world economy requires the

improvement of living standards and the
development of resources in areas where
human poverty and misery now prevail.
Without such improvement the recovery of
Europe and the future of our own economy
will not be secure. I urge that the Congress
adopt the legislation now before it to provide
for increasing the flow of technical assistance
and capital investment in underdeveloped
regions.

It is more essential now than ever, if the
ideals of freedom and representative gov-
ernment are to prevail in these areas, and
particularly in the Far East, that their peo-
ples experience, in their own lives, the bene-
fits of scientific and economic advances.
This program will require the movement of
large amounts of capital from the industrial
nations, and particularly from the United
States, to productive uses in the underde-
veloped areas of the world. Recent world
events make prompt action imperative.

This program is in the interest of all peo-
ples — ^and has nothing in common with
either the old imperialism of the last century
or the new imperialism of the Communists.

Our aim for a peaceful, democratic world
of free peoples will be achieved in the long
run, not by force of arms, but by an appeal
to the minds and hearts of men. If the
peace policy of the democratic nations is to
be successful, they must demonstrate that
the benefits of their way of life can be in-
creased and extended to all nations and all
races.

In the world today we are confronted with
the danger that the rising demand of people
everywhere for freedom and a better life
may be corrupted and betrayed by the false
promises of communism. In its ruthless
struggle for power, communism seizes upon
our imperfections, and takes advantage of
the delays and setbacks which the democratic
nations experience in their effort to secure
a better life for their citizens. This chal-

[2] Jan. 4

Public Papers of the Presidents

lenge to us is more than a military challenge.
It is a challenge to the honesty of our profes-
sion of the democratic faith; it is a challenge
to the efficiency and stability of our economic
system; it is a challenge to the willingness
to work with other peoples for world peace
and for world prosperity.

For my part I welcome that challenge. I
believe that our country, at this crucial point
in world history, will meet that challenge
successfully. I believe that, in cooperation
with the other free nations of the world, we
shall extend the full benefits of the demo-
cratic way of life to millions who do not now
enjoy them, and preserve mankind from
dictatorship and tyranny.

I believe that we shall succeed in our
struggle for this peace, because I have seen
the success we have had in our own coun-
try in following the principles of freedom.
Over the last 50 years, the ideals of liberty
and equal opportunity to which this Na-
tion is dedicated have been increasingly
realized in the lives of our people.

The ideal of equal opportunity no longer
means simply the opportunity which a man
has to advance beyond his fellows. Some of
our citizens do achieve greater success than
others as a reward for individual merit and
effort, and this is as it should be. At the
same time our country must be more than
a land of opportunity for a select few. It
must be a land of opportunity for all of us.
In such a land we can grow and prosper to-
gether.

The simple truth that we can all go for-
ward together is often questioned by selfish
or shortsighted persons. It is strange that
this is so, for this proposition is so clearly
demonstrated by our national history. Dur-
ing the last 50 years, for example, our Na-
tion has grown enormously in material well-
being. This growth has come about, not by
concentrating the benefits of our progress in
the hands of a few, but by increasing the

wealth of the great body of our Nation and
our citizens.

In the last 50 years the income of the aver-
age family has increased so greatly that its
buying power has doubled. The average
hours of work have declined from 60 to 40
a week, the whole hourly production of the
average worker has tripled. Average wages,
allowing for price changes, have increased
from about 45 cents an hour to $1.40 an hour.

We have accomplished what to earlier ages
of mankind would have been a miracle — ^we
work shorter hours, we produce more, and
we live better.

Increasing freedom from poverty and
drudgery has given a fuller meaning to
American life. Our people are better edu-
cated; we have more opportunities for travel
and recreation and enjoyment of the arts.
We enjoy more personal liberty in the
United States today than ever before.

If we can continue in the spirit of co-
operative adventure which has marked the
recent years of our progress, we can expect
further scientific advances, further in-
creases in our standard of living, and a still
wider enjoyment of democratic freedom.

No one, of course, can foretell the future
exactly. However, if we assume that we
shall grow as fast in the future as we have
grown in the past, we can get a good idea of
how much our country should grow in the
next 50 years.

At present our total national production
is $255 billion a year. Our working popula-
tion and our output per worker are increase
ing. If our productive power continues to
increase at the same rate as it has increased
over the past 50 years, our total national
production 50 years from now will be nearly
four times as much as it is today. Allowing
for the expected growth in population, this
would mean that the real income of the aver-
age family in the year 2000 A.D. would be
about three times what it is today.

Harry S. Truman, ig^o

Jan. 4 [2]

These are estimates of what we can do in
the future, but we can reach these heights
only if we follow the right policies. We
have learned by bitter experience that prog-
ress is not automatic — that wrong policies
lead to depression and disaster. We cannot
achieve these gains unless we have a stable
economy and avoid the catastrophes of boom
and bust that have set us back in the past.

These gains cannot be achieved unless our
businessmen maintain their spirit of initiative
and enterprise and operate in a competitive
economy. They cannot be achieved unless
our workingmen and women and their
unions help to increase productivity and ob-
tain for labor a fair share of the benefits of
our economic system. They cannot be
achieved unless we have a stable and pros-
perous agriculture. They cannot be achieved
unless we conserve and develop our natural
resources in the public interest. Our system
will not work unless our people are healthy,
well-educated, and confident of the future.
It will not work unless all citizens can par-
ticipate fully in our national life.

In achieving these gains the Government
has a special responsibility to help create
and maintain the conditions which will per-
mit the growth we know is possible. Fore-
most among these conditions is the need
for a fair distribution of our increasing pros-
perity among all the great groups of our
population who help to bring it about —
labor, business, agriculture.

Businessmen must continue to have the
incentives necessary for investment and for
the development of new lines of enterprise.
In the future growth of this country, lie
possibilities for hundreds of thousands of
new and independent businesses. As our
national production increases, as it doubles
and redoubles in the next 50 years, the num-
ber of independent and competing enter-
prises should also increase. If the number
does not increase, our constantly growing

economy will fall under the control of a few
dominant economic groups whose powers
will be so great that they will be a challenge
to democratic institutions.

To avoid this danger, we must curb
monopoly and provide aids to independent
business so that it may have the credit and
capital to compete in a system of free enter-
prise. I recommend that the Congress com-
plete action at this session on the pending
bill to close the loopholes in the Clayton
Act which now permit monopolistic merg-
ers. I also hope before this session is over
to transmit to the Congress a series of pro-
posals to strengthen the antimonopoly laws,
to assist small business, and to encourage the
growth of new enterprises.

In the case of labor, free collective bar-
gaining must be protected and encouraged.
Collective bargaining is not only a funda-
mental economic freedom for labor. It is
also a strengthening and stabilizing influence
for our whole economy.

The Federal statute now governing labor
relations is punitive in purpose and one-
sided in operation. This statute is, and al-
ways has been, inconsistent with the practice
of true and effective collective bargaining.
It should be repealed and replaced by a law
that is fair to all and in harmony with our
democratic ideals.

A full understanding of the problems of
modern labor relations is of such importance
that I recommend the establishment of a
labor extension service to encourage educa-
tional activities in this field.

Another essential for our continued
growth is a stable and prosperous agricul-
ture. For many years we have been build-
ing a program to give the farmer a reason-
able measure of protection against the special
hazards to which he is exposed. That pro-
gram was improved at the last session of the
Congress. However, our farm legislation
is still not adequate.

[2] Jan. 4

Public Papers of the Presidents

Although the Congress has properly de-
clared as a matter of national policy that safe-
guards must be maintained against slumps
in farm prices, there are serious shortcomings
in the methods now available for carrying
out this policy. Mandatory price supports
should be provided for the commodities not
now covered which are major sources of
farm income.

Moreover, we should provide a method of
supporting farm income at fair levels which
will, at the same time, avoid piling up un-
manageable surpluses and allow consumers
to obtain the full benefit of our abundant
agricultural production. A system of pro-
duction payments gives the greatest promise
of accomplishing this purpose. I recom-
mend that the use of such a system be
authorized.

One of the most important factors in our
continued grovnh is the construction of more
good, up-to-date housing. In a country
such as ours there is no reason why decent
homes should not be within the reach of
all. With the help of various Government
programs we have made great progress in
the last few years in increasing the number
of homes.

Despite this increase, there is still an acute
shortage of housing for the lower and
middle-income groups, especially in large
metropolitan areas. We have laid the
groundwork for relieving the plight of lower-
income families in the Housing Act of 1949.
To aid the middle-income families, I recom-
mend that the Congress enact new legislation
authorizing a vigorous program to help co-
operatives and other nonprofit groups build
housing which these families can afford.

Rent control has done a great deal to
prevent the housing shortage from having
had worse effects during this postwar period
of adjustment. Rent control is still neces-
sary to prevent widespread hardship and
sharp curtailment of the buying power of

millions of consumers in metropolitan areas.
I recommend, therefore, that rent control be
continued for another year.

If we are to achieve a better life for all,
the natural resources of the country must be
regarded as a public trust. We must use
our precious assets of soil, water, and forest,
and grassland in such a way that they be-
come constandy more productive and more
valuable. Government investment in the
conservation and development of our re-
sources is necessary to the future economic
expansion of the country.

We need to enlarge the production and
transmission of public power. That is true
not only in those regions which have already
received great benefits from Federal power
projects, but also in regions such as New
England where the benefits of large-scale
public power development have not yet been
experienced.

In our hydroelectric and irrigation under-
takings, as well as in our other resource pro-
grams, we must continue policies to assure
that their benefits will be spread among the
many and not restricted to the favored few.

Important resource legislation which
should be passed at this session includes the
authorization of the St. Lawrence seaway
and power project and the establishment of
the Columbia Valley Administration — ^the
establishment of the Columbia Valley Ad-
ministration, I don't want you to miss that.

Through wise Government policies and
Government expenditures for the conserva-
tion and development of our natural re-
sources, we can be sure of transmitting to
our children and our children's children a
country far richer and more productive than
the one we know today.

The value of our natural resources is con-
standy being increased by the progress of
science. Research is finding new ways of
using such natural assets as minerals, sea
water, and plant life. In the peaceful de-

Harry S. Truman, ig^o

Jan. 4 [2]

velopment of atomic energy, particularly, we
stand on the threshold of new wonders.
The first experimental machines for pro-
ducing useful power from atomic energy are
now under construction. We have made
only the first beginnings in this field, but in
the perspective of history they may loom
larger than the first airplane, or even the first
tools that started man on the road to civili-
zation.

To take full advantage of the increasing
possibilities of nature we must equip our-
selves with increasing knowledge. Govern-
ment has a responsibility to see that our
country maintains its position in the advance
of science. As a step toward this end, the
Congress should complete action on the
measure to create a National Science Foim-
dation.

Another duty of the Government is to pro-
mote the economic security, the health, and
the education of its citizens. By so doing,
we strengthen both our economy and the
structure of our society. In a nation as rich
as ours, all citizens should be able to live in
decency and health.

Our Social Security System should be de-
veloped into the main reliance of our people
for basic protection against the economic
hazards of old-age, unemployment, and ill-
ness. I earnestly hope that the Congress
will complete action at this session on legis-
lation to increase the benefits and extend the
coverage of old-age and survivors' insurance.
The widespread movement to provide pen-
sions in private industry dramatizes the need
for improvements in the public insurance
system.

I also urge that the Congress strengthen
our unemployment compensation law to
meet present-day needs more adequately.
The economic downturn of the past year
was the first real test that our system of un-
employment insurance has had to meet.
That test has proved the wisdom of the sys-

tem, but it has also made strikingly appar-
ent the need for improving its operation and
increasing its coverage and its benefits.

In the field of health there are immense
opportunities to extend to more of our people
the benefits of the amazing advances in med-
ical science. We have made a good begin-
ning in expanding our hospitals, but we must
also go on to remedy the shortages of doc-
tors, nurses, and public health services, and
to establish a system of medical insurance
which will enable all Americans to afford
good medical care.

We must take immediate steps to
strengthen our educational system. In many
parts of our country, young people are being
handicapped for life because of a poor educa-
tion. The rapidly increasing number of
children of school age, coupled with the
shortage of qualified teachers, makes this
problem more critical each year. I believe
that the Congress should no longer delay in
providing Federal assistance to the States so
that they can maintain adequate schools.

As we go forward in achieving greater
economic security and greater opportunity
for all our people, we should make every ef-
fort to extend the benefits of our democratic
institutions to every citizen. The religious
ideals which we profess, and the heritage of
freedom which we have received from the
past, clearly place that duty upon us. I again
urge the Congress to enact the civil rights
proposals I made in February 1948. These
proposals are for the enactment of Federal
statutes which will protect all our people in
the exercise of their democratic rights and
their search for economic opportunity, grant
statehood to Alaska and Hawaii, provide
a greater measure of self-government for our
island possessions, and accord home rule to
the District of Columbia. Some of those
proposals have been before the Congress for
a long time. Those who oppose them, as
well as those who favor them, should recog-

[2] Jan. 4

Public Papers of the Presidents

nize that it is the duty of the elected repre-
sentatives of the people to let these proposals
come to a vote.

Our democratic ideals, as vi^ell as our best
interests, require that v^e do our fair share
in providing homes for the unfortunate vic-
tims of v^ar and tyranny. In so doing, we
shall add strength to our democracy through
the abilities and skills v^hich these men and
women will bring here. I urge the prompt
enactment by the Congress of the legisla-
tion now before it to extend and broaden the
existing displaced persons law and remove its
discriminatory features.

The measures I am recommending to
the Congress concerning both our foreign
and our domestic policies represent a care-
fully considered program to meet our na-
tional needs. It is a program which neces-
sarily requires large expenditures of funds.
More than 70 percent of the Government's
expenditures are required to meet the costs
of past wars and to work for world peace.
This is the dominant factor in our fiscal
policy. At the same time, the Government
must make substantial expenditures which
are necessary to the growth and expansion
of the domestic economy.

At present, largely because of the ill-con-
sidered tax reduction of the 8oth Congress,
the Government is not receiving enough
revenue to meet its necessary expenditures.

To meet this situation, I am proposing
that Federal expenditures be held to the low-
est levels consistent with our international
requirements and the essential needs of
economic growth, and the well-being of our
people. I think I had better read that over;
you interrupted me in the middle.

To meet this situation, I am proposing that
Federal expenditures be held to the lowest
levels consistent with our international re-
quirements and the essential needs of eco-
nomic growth, and the well-being of our
people. Don't forget that last phrase. At

the same time, we must guard against the
folly of attempting budget slashes which
would impair our prospects for peace or crip-
ple the programs essential to our national
strength.

The budget recommendations I shall short-
ly transmit to the Congress show that we can
expect a substantial improvement in our fis-
cal position over the next few years, as the
cost of some of our extraordinary postwar
programs declines, and as the Government
revenue rises as a result of growth in em-
ployment and national income. To fur-
ther improve our fiscal outlook, we should
make some changes in our tax system which
will reduce present inequities, stimulate
business activity, and yield a moderate
amount of additional revenue. I expect to
transmit specific recommendations to the
Congress on this subject at a very early date.

The fiscal policy I am recommending is
the quickest and safest way of achieving a
balanced budget.

As we move forward into the second half
of the 20th century, we must always bear in
mind the central purpose of our national life.
We do not seek material prosperity for our-
selves because we love luxury; we do not aid
other nations because we wish to increase
our power. We have not devised programs
for the security and well-being of our people
because we are afraid or unwilling to take
risks. This is not the meaning of our past
history or our present course.

We work for a better life for all, so that all
men may put to good use the great gifts
with which they have been endowed by their
Creator. We seek to establish those material
conditions of life in which, without excep-
tion, men may live in dignity, perform use-
ful work, serve their communities, and wor-
ship God as they see fit.

These may seem simple goals, but they
are not little ones. They are worth a great
deal more than all the empires and conquests

Harry S. Truman, igp

Jan. 5 [3]

of history. They are not to be achieved by
military aggression or political fanaticism.
They are to be achieved by humbler means —
by hard work, by a spirit of self-restraint in
our dealings v^ith one another, and by a deep
devotion to the principles of justice and
equality.

It should make us truly thankful, as we
look back to the beginnings of this country,
that we have come so far along the road to
a better life for all. It should make us hum-
ble to think, as we look ahead, how much

farther we have to go to accomplish, at home
and abroad, the objectives that were set out
for us at the founding of this great Nation.
As we approach the halfway mark of the
20th century, we should ask for continued
strength and guidance from that Almighty
Power who has placed before us such great
opportunities for the good of mankind in
the years to come.

note: The President spoke at i p.m. The address
was broadcast over radio and television.

3 The President's News Conference of
January 5, 1950

THE PRESIDENT, [i.] I have a statement I
want to read to you. It will be handed to
you in mimeographed form after the press
conference.

[Reading] "The United States Govern-
ment has always stood for good faith in in-
ternational relations. Traditional United
States policy toward China, as exemplified
in the open-door policy, called for interna-
tional respect for the territorial integrity of
China. This principle was recendy reaf-
firmed in the United Nations General As-
sembly Resolution of December 8, 1949,
which, in part, calls on all states, and I quote:

" To refrain from (a) seeking to acquire
spheres of influence or to create foreign con-
trolled regimes within the territory of China;
(b) seeking to obtain special rights or priv-
ileges within the territory of China.'"

That is the end of the quotation from the
United Nations Resolution.

[Continuing reading] "A specific applica-
tion of the foregoing principles is seen in
the present situation with respect to For-
mosa. In the Joint Declaration at Cairo
on December i, 1943, the President of the
United States, the British Prime Minister,
and the President of China stated that it was

their purpose that territories Japan had
stolen from China, such as Formosa, should
be restored to the Republic of China. The
United States was a signatory to the Potsdam
Declaration of July 26, 1945, which declared
that the terms of the Cairo Declaration
should be carried out. The provisions of
this declaration were accepted by Japan at
the time of its surrender. In keeping with
these declarations, Formosa was surrendered
to Generalissimo Chiang Kai-shek, and for
the past 4 years the United States and other
Allied Powers have accepted the exercise of
Chinese authority over the island.

"The United States has no predatory de-
signs on Formosa, or on any other Chinese
territory. The United States has no desire
to obtain special rights or privileges, or to
establish military bases on Formosa at this
time. Nor does it have any intention of
utilizing its Armed Forces to interfere in
the present situation. The United States
Government will not pursue a course which
will lead to involvement in the civil conflict
in China.

"Similarly, the United States Govern-
ment will not provide military aid or advice
to Chinese forces on Formosa. In the view

[S] Jan. 5

Public Papers of the Presidents

of the United States Government, the re-
sources on Formosa are adequate to enable
them to obtain the items which they might
consider necessary for the defense of the
island. The United States Government pro-
poses to continue under existing legislative
authority the present EGA program of eco-
nomic assistance."

At 2:30 this afternoon Dean Acheson v^ill
hold a press conference and further elab-
orate on the details with reference to this
statement which I have just issued on the
policy of the United States Government
toward China and Formosa.^

I do not want to answer any questions on
the subject now, so save your questions for
this afternoon.

Are there any other questions? ILaughter^

[2.] Q. Mr. President, I have a couple of
atomic energy questions.

THE PRESIDENT. ShoOt.

Q. Since you were the source of informa-
tion on the first Russian atomic bomb ex-
plosion, can you comment on a London re-
port that said Russia is going to explode
another bomb next Saturday?

THE PRESIDENT. I had no advance infor-
mation on the explosion of the other Russian
bomb. Naturally, I have no advance in-
formation on this one.^

[3.] Q. Mr. President, were you person-
ally sufEciendy acquainted with Sir Willmott
Lewis ^ that you would care to comment on
his passing?

THE PRESIDENT. I was just casually ac-
quainted with him, but I knew him by repu-
tation, and of course I was sincerely sorry
to hear of his passing. I didn't know about

* For the remarks of the Secretary o£ State at his
press conference on January 5, see the Department of
State Bulletin (vol. 22, p. 79).

^For the statement by the President announcing
the first atomic explosion in the Soviet Union, see
1949 volume, this series, Item 216.

^ Sir Willmott H. Lewis, Washington correspond-
ent emeritus of the London Times.

it until I saw it in the paper, I think this
morning.

[4.] Q. Mr. President, the St. Louis
Citizens Fuel Committee and the St. Louis
Retail Coal Association both wired you, ei-
ther last night or today, saying that while
temperatures were dropping out there their
fuel supply was running low, and urged
that for public health and safety you secure
full operation of the coal mines without
delay. Have you seen those telegrams?

THE PRESIDENT. No, I havcn't seen them.

Q. Any comment?

THE PRESIDENT. I think possibly they were
sent to the press and not to me, so I can't an-
swer them to the press. However, when I
get them, I will see if they are entided to an
answer, and if they are they will get an
answer.

[5.] Q. Mr. President, when you re-
ferred to public power development in New
England in your message,^ were you refer-
ring to the Passamaquoddy tidal power or
were you referring to river power?

THE PRESIDENT. Both.

Q. On that same line, how would you
favor similar TVA development on the
Cumberland River in Tennessee?

THE PRESIDENT. I am uot familiar with
that situation, and I can't answer that ques-
tion.

[6.] Q. Mr. President, I am in a high
state of confusion concerning the — on that
perennial St. Lawrence power and naviga-
tion project.

THE PRESIDENT. What causes the confu-
sion?

Q. There have been a lot of maneuvers.

THE PRESIDENT. What do you mean?

Q. I don't know whether I can clear them
up in this rapid fire question and answer,
but I would like to explain a little bit about
it to you, if you will permit me?

* See Item 2.

Harry S. Truman, ig^o

Jan. 5 [3]

THE PRESIDENT. Surc, go right ahead.

Q. You know some months ago the On-
tario and New York power people got to-
gether on a proposal to develop power sepa-
rately from the navigation, and you took the
stand that it was all or nothing.

THE PRESIDENT. That is correct, and I still
am of that same frame of mind; all or
nothing.

Q. And that seemed effectively to put it
on ice for a while, but while you were away,
I think, they reactivated it over in the Federal
Power Commission.

THE PRESIDENT. Well, I will never agree to
the development of the St. Lawrence power
project until the St. Lawrence Seaway proj-
ect is attached to it. They go together. It
should be developed together. That is for
the interests of the whole United States,
when it is developed that way. The other
development is just for the interests of power
in Ontario and the State of New York. And
I want the whole country to have some good
out of that development if we are going to
pay for it.

[7.] Q. Mr. President, for those of us
who have been waiting for a full National
Labor Relations Board, have you any news
today?

THE PRESIDENT. No, I havcn't.

Q. Have you any nominations at all that
you might tell us?

THE PRESIDENT. A whole batch of recess
appointments today at noon.°

Q. Recess appointments?

THE PRESIDENT. Appointments that were
made during recess. I am sending them
up. We will give you a list of them.

Q. Any interesting ones that might make
better news ? [Laughter]

THE PRESIDENT. No. You havc them all.

"For the list of the President's nominations re-
ceived by the Senate on January 5, sec the Con-
gressional Record (vol. 96, p. 106).

[8.] Q. Mr. President, there are reports
from out in Missouri as to whether you
have endorsed the candidacy of State Sen-
ator Emery Allison for United States Sena-
tor?

THE PRESIDENT. I kuow Emery Allison
very well. I like him, and I think he would
make a wonderful United States Senator
from Missouri. When the primary comes
around, I shall vote for him.

Q. Where is he from, Mr. President?

THE PRESIDENT. Where is he from? RoUa,
Mo. He is the ranking Democratic member
of the State Senate of Missouri.

Q. How do you spell his name, sir?

THE PRESIDENT. A-l-l-i-s-o-u — but I am not
sure whether it has two I's or not. E-m-e-r-y
A-1-l-i-s-o-n. Whether it has two I's or not,
I can't remember.

[9.] Q. There is another power ques-
tion I would like to ask you about?

THE PRESIDENT. Shoot — ^go right ahead.

Q. Do you favor development of Niagara
power as well as the St. Lawrence?

THE PRESIDENT. Oh, yes. I am for the de-
velopment of all the power we can get in
that corner of the United States. There are
four great power projects in this country in
which I am vitally interested. The North-
east power project, which includes New
England developments, about which I was
talking awhile ago, and the St. Lawrence.
And the Northwest, which includes the
Columbia and Snake River developments,
and the Central Valley of California. And
the Southwest, which includes Boulder Dam,
and those projects in Texas and Oklahoma.
And the southeast — ^northeast — northwest
Arkansas, southwest Missouri, and northeast
Oklahoma. And then the southeast devel-
opment of the Tennessee Valley, and the
Savannah, and the rivers in South Carolina
on which we are building power projects.

We will then have a network of power in

[3] Jan. 5

Public Papers of the Presidents

the United States, and if we can get the
three developments for the upper Missis-
sippi, Missouri, and Ohio Valleys, we will
have an inexhaustible supply of power, of
which I think there can never be too much.

Q. In connection with that, are you figur-
ing on the St. Lawrence Valley?

THE PRESIDENT. St. Lawreuce Seaway, I
want the St. Lawrence Seaway development
all the way to Chicago, so that we can — and
Duluth — so that we can tie up in Chicago.
We have nothing at the docks in Chicago
and Duluth.

Q. I wonder whether you are in favor of
a long-term TVA for that area?

THE PRESIDENT, No, that will have to be
a proposal carried out between the Govern-
ments of Canada and the United States, and
the division of power in the United States
will have to be under the control of the
Federal Government.

Q. Well, Mr. President, will you send a
message on New England development?

THE PRESIDENT. I probably will. As soon
as possible, I probably will send a letter to
the Congress on the subject.^

[lo.] Q. Mr. President, is it true that
you plan to decide by February 15th on con-
struction of a hydrogen-powered atomic
bomb project? ^

THE PRESIDENT. I have no comment to
make on that.

[11.] Q. Mr. President, in your message
yesterday, I believe you did not mention the
Missouri Valley Authority?

THE PRESIDENT. Well, I am interested in
the development of the Missouri, Mississippi,
and Ohio Rivers as a project. I think they
will — all three of them, the Mississippi, the
Missouri, and the Ohio Rivers — will soon
be developed as a central valley project for
the United States.

® See Item 33.
■^ See Item 26.

[12.] Q. Mr. President, do you favor
Federal development of the Niagara River?

THE PRESIDENT. What's that?

Q. Federal development of the Niagara
River?

THE PRESIDENT. I waut to make it a seaway
of the St. Lawrence River. If the Niagara
is included in that, why of course that will
be all right. I don't think it is, though.
I think there is a canal that goes around that
still.

Q. The United States and Canada are now
conferring on power development in the
Niagara River.

THE PRESIDENT. The St. Lawreuce devel-
opment, I think, was our project, and I am
for the development of the St. Lawrence
Seaway power project. You can make it as
broad as you want to.

[13.] Q. In view of your comment on
the Missouri election, do you have anybody
in Ohio that you like the looks of?

THE PRESIDENT. I don't dabble in primary
politics in any State except Missouri.

Q. Mr. President, in Pennsylvania Senator
Myers is unopposed for the — ^the Democratic
nomination for Senator. The Republicans,
I believe, have a couple of boys that haven't
been definitely announced. I was wonder-
ing if you are going into Pennsylvania to
speak for Senator Myers?

THE PRESIDENT. It wou't be ucccssary for
me to go into Pennsylvania in the primary.
I don't care how much trouble the Repub-
licans have in the primary. I hope the
Democrats won't have any. [Laughter]

Q. I mean subsequently?

THE PRESIDENT. Well, I wiU auswer that
question when the time comes.

[14.] Q. Mr. President, I would like to
get this Missouri Valley thing straightened
out.

THE PRESIDENT. ShoOt.

Q. Is it your idea that the Pick-Sloan

Harry S. Truman, ig$o

Jan. 5 [3]

plan ^ will eventually envelop the Missouri
Valley Authority?

THE PRESIDENT. Yes. Ycs. I am very
sure it vi^ill.

Q. That is your idea, that eventually Pick-
Sloan v^ill

THE PRESIDENT. Will develop all the Mis-
souri Valley Authority. Then I v^ant to
develop the Mississippi and Ohio in con-
junction w^ith the suggestion covering the
whole valley.

Q. Now then, on the Missouri, will you
have an authority — an administration for the
Pick-Sloan plan, or will you still have

THE PRESIDENT. We wiU cross that bridge
when we get to it. I am not ready to go into
detail on it at all. There has been too much
detail on it now. That is the reason we are
having trouble with it. You have got nine
Governors of nine States on that river.

[15.] Q. Mr. President, one more ques-
tion in answer to Mrs. Craig's? ^

THE PRESIDENT. Sure.

Q. You said that you were covering the
plan with a letter. Does that apply solely
to Northeast power, or the whole project?

THE PRESIDENT. That applies to New Eng-
land. We have already made a statement
on the St. Lawrence Seaway and power
project. I am anxious to see that there is
proper development of power in the New
England area.

[16.] Q. When do you plan to submit
your special message on taxes?

® Joint plan for the division of responsibility in the
Missouri Valley between the Corps of Engineers and
the Bureau of Reclamation. The Engineer Corps
was given responsibility for determining the capac-
ities of main-stem and tributary reservoirs for flood
control and navigation. The Bureau assumed re-
sponsibility for determining the capacities of reser-
voirs for irrigation purposes. The plan was
approved by Congress on December 22, 1944 (sec.
9, 58 Stat. 891). However, the Congress did not
approve President Roosevelt's request for the crea-
tion of a Missouri Valley Authority.

*Mrs. May Craig of the Portland (Maine) Press
Herald.

THE PRESIDENT. Just as soon as it is ready .^°

Q. Mr. President, what are your plans on
strengthening the antitrust laws?

THE PRESIDENT. They are in the message.
I made them as plain as I could in the mes-
sage.^^

Q. You spoke of future recommendations.

THE PRESIDENT. That is correct. Just as
quickly as I can get the recommendations
ready, I will send them down.

Q. The same for small business ?

THE PRESIDENT. Yes. They cover both.
Can't have one without the other.

[17.] Q. Mr. President, how do you like
the reaction to your message yesterday?

THE PRESIDENT. It was fine. I told you
that yesterday as I came out. [Laughter]

Q. Mr. President, how did you like the
Republican response to your reference to
the

THE PRESIDENT. I was highly pleased when
they turned that into an ovation for me.
[Laughter]

Q. Mr. President, do you expect a similar
ovation when you explain how much a
moderate tax increase is?

THE PRESIDENT. Yes. Ycs, I do. Especially
from the Democrats.

[18.] Q. Are you encouraged to go back
to Key West again this winter?

THE PRESIDENT. Well, I dou't kuOW

whether I can go or not. I would if I could.
Mighty nice place to be when you want
plenty of sunlight. They tell me it is going
down to zero here pretty soon. I suppose
we will all want to go where it is warm.

What did you ask me?

[19.] Q. There was a rise in stock mar-
ket prices, I noticed, after you spoke. Do
you regard that as one of the good reac-
tions

THE PRESIDENT. Well, I don't — I cau't com-
ment on that because I didn't pay any atten-

'<* See Item 18.
" See Item 2.

[3] Jan. 5

Public Papers of the Presidents

tion to that. I wasn't making a speech to
affect the stock market. [Laughterl It
was in the public interest.

[20.] Q. Was Speaker Rayburn's remark
about the size of the budget intentional, or
a slip, or ^^

THE PRESIDENT. Well now, I Can't answer
for Speaker Rayburn. Why don't you ask
him that question? The budget will go
down — the Budget Message will go down
Monday morning — ^Monday at noon — ^when-
ever the Congress meets, and we will have
the seminar on the Budget on Saturday
morning,^^ and you will know just as much
about it as I do. I am not going to discuss
it now.

[21.] Q. Mr. President, your reference to
the power development in the big river
basins was largely in terms of electric power.
You have in mind, I presimie, more general
multipurpose development?

THE PRESIDENT. The principal develop-
ment in the central valley of the Missouri,
Mississippi, and Ohio is navigation and flood
control. Up as far as Sioux City, Iowa, on
the Missouri, there is no possible power for
that particular project except maybe on some
of the branches. The Missouri River carries
more sediment than any other river in the
world except the Danube, and if you would
attempt to build a dam from bluff to bluff
on the Missouri River, right below Sioux
City, Iowa, it wouldn't be but about a year
and a half and you would have lots of mud
behind the dam, and you would have a fall
there.

The development of the Missouri, Ohio,
and the Mississippi are projects that will have
to be worked out as the features of the

"As reported in the press, the Speaker saw the
new budget during a White House conference on
January 3, after which he stated that the budget
would call for an expenditure of "a little above
$42 billion."

^^ See Item 8.

ground reveal its condition.

Q. Speaking of the Ohio Valley, how far
up the river would you go in the develop-
ment of it?

THE PRESIDENT. Do you know where the
Ohio originates? At Pittsburgh, where the
Alleghenies come together, where there are
now some flood control and power dams on
the Monongahela River. And the way to
control floods is to control the little rivers,
and that will have to be done all over that
valley in order to control the floods.

Q. That is mainly a flood control proposi-
tion for the Ohio Valley?

THE PRESIDENT. That is the most impor-
tant part of the development.

[22.] Q. You have made recommenda-
tions several times on the Central Valley of
California?

THE PRESIDENT. The Valley of California —
Central Valley of California, yes. I am in
the same frame of mind as I am for the rest
of these developments. I want to see a
Central Valley Authority from Shasta Dam
all the way up to the San Bernadino
Mountains.

[23.] Q. Where there are expensive de-
tails of construction, whom do you want to
transmit the power?

THE PRESIDENT. Where it is necessary, the
United States Government. Where private
industry can do it as cheaply as the United
States Government, I am happy to have them
doit.

[24.] Q. Mr. President, do you plan to
find out the type of authority for that Savan-
nah Valley in the southeast?

THE PRESIDENT. I hadn't given that any
thought.

Q. Merely want the dam built?

THE PRESIDENT. I waut power developed,
principally.

[25.] Q. Mr. President, do you antici-
pate any real coordination on these three

Harry S. Truman, ig^o

Jan. 5 [4]

river valleys in your present term of office?

THE PRESIDENT. Which three do you
mean?

Q. The Mississippi, Missouri, and Ohio?

THE PRESIDENT. That is a tremendous proj-
ect — will cost about a billion and a half
dollars. If it should be, it will have to come

more or less gradually. We have already
spent a billion, 250 million. It is about time

we did some developments

Reporter: Thank you, Mr. President.

note: President Truman's two hundred and tenth
news conference was held in his office at the White
House at 10:40 a.m. on Thursday, January 5, 1950.

4 Remarks at the American Federation of Labor's Samuel Gompers
Centennial Dinner. January 5, 1950

Mr. Chairman, Mr, Vice President, mem-
bers of this great organization:

I have been over at the house all evening,
working on two more messages on the state
of the Union. One of them is ready to go
down tomorrow. It is the Economic Mes-
sage. And then I have one that is creating
a great deal of conversation, known as the
Budget Message. Everybody seems to know
all about it but me, and I am the only one
that knows all the figures in it.

But I was sitting over there thinking
about this celebration in honor of one of
labor's greatest statesmen, and I couldn't
stay away.

I knew that anything I would say would
be a surplus remark after the Vice President,
and Matthew WoU, and William Green had
paid tribute to the great Samuel Gompers;
but I want you to understand that I remem-
ber him distincdy as the originator of the
great movement which set labor free. And
I wanted to come over here and pay tribute
to him.

I remember when he passed away. He
passed away in 1924, the year in which I was
defeated for reelection — and they never suc-
ceeded in doing that to me since.

I was one of Samuel Gompers' great ad-
mirers when I was a very young man on the
farm. Everybody in that day and age con-
sidered him a labor statesman. He was not
only a labor statesman in a bipartisan sense,
but he was just as good a Democrat as I
ever was.

I remember very distinctly his support of
Woodrow Wilson when Woodrow Wilson
needed that support worse than anything he
ever needed in his life. That was when
California decided the election for Woodrow
Wilson in 19 1 6.

Samuel Gompers made a great contribu-
tion to the welfare of this great Nation of
ours, and I consider it a very high honor that
Mr. Green and the people who are holding
this meeting tonight should ask me to come
over and pay this very slight tribute to one
of your greatest leaders who ever lived.

And I thank you for that privilege.

note: The President spoke at 10:42 p.m. at the
Statler Hotel in Washington. In his opening words
he referred to George Meany, secretary-treasurer of
the American Federation of Labor and chairman of
the dinner, and Alben W. Barkley, Vice President
of the United States. Later in his remarks the
President referred to William Green and Matthew
Woll, president and vice president of the American
Federation of Labor.

[5] Jan. 6

Public Papers of the Presidents

5 Statement by the President on the Midcentury White House
Conference on Children and Youth. January 6, 1950

IN THE State of the Union Message to
Congress, I called attention to the supreme
need of our time to use our great powers of
mastery over the physical world to develop
the moral and legal framework within which
mankind can live together in peace and
harmony. The peoples of the earth look to
us as never before for good will, strength,
and wise leadership. If we are not to fail
them and ourselves, our children must be
prepared.

It is in the hope that in the next half cen-
tury we may write a new chapter of history,
different from the first half, with its wars
and injustices on an unparalleled scale, that
I have proposed the Midcentury White
House Conference on Children and Youth
to be held in December 1950.

I was delighted to learn from the repre-
sentatives of the national committee for this
Conference, who called on me today, that
already great numbers of citizens see the
significance of this effort, and are working
together to make this Midcentury Conference

a powerful force for improving the environ-
ment in which our children grow up, for
increasing our understanding of children's
needs, and for multiplying their opportuni-
ties for happiness and useful service. I have
been impressed by the opportunity provided
in this Conference to combine widespread
public participation with expert help, in a
common effort to advance the well-being of
our next generation. I have urged the com-
mittee to press forward with every resource
to accomplish this objective and have as-
sured the committee of my complete support.

note: The Midcentury White House Conference on
Children and Youth was held on December 3-7,
1950, in Washington, D.C. For the President's
address before the Conference on December 5, see
Item 299. See also 1949 volume, this series, Items
198, 204.

As recorded in the White House appointment
book, the following representatives of the National
Committee for the Conference called on the Presi-
dent on January 6, 1950, at 11:45 a.m.: Mrs. Frank-
lin D. Roosevelt, Chauncey McCormack, president
of the Chicago Art Institute, Mrs. David Levy, and
Katharine F. Lenroot, Chief of the Children's Bureau,
Federal Security Agency.

6 Annual Message to the Congress: The President's
Economic Report. January 6, 1950

To the Congress of the United States:

As 1950 opens, renewed confidence pre-
vails in the American economy. This con-
fidence is in itself an element of strength;
and it is justified by the facts.

Late in 1948 we stood at the peak of the
inflationary boom. It was clear that an
eventual adjustment was inevitable before
we would have a firm basis for stability and
steady economic growth. During 1949 we
met the test of that adjustment. Despite
rough going for a few months, we made
necessary changes with much less distress

and difficulty than ever before. Today we
are on firmer ground than we were a year
ago.

Prices are down somewhat, and show the
relative stability on which firm business and
consumer plans can be based. Inventories
of manufacturers and retailers have been re-
duced, and now are better adjusted to the
rate of sales. These changes were accom-
plished with only very small reductions in
dollar incomes and consumer spending.
Allowing for price changes, the volume of
goods and services purchased by consumers

Harry S. Truman, ig^o

Jan. 6 [6]

in 1949 was actually larger than in 1948.
Business is proceeding with good profit pros-
pects. Home building in 1949 reached a
higher level than ever before.

More important still, employment and pro-
duction, which declined during the first few
months of 1949, have in recent months been
moving upward again. Considerably more
people now have jobs than at the low point
last year. Industrial production has in-
creased by 9 percent since July. Holiday
sales have hit an all-time peak.

The relatively safe passage from inflation
to greater stability was no accident. Busi-
nessmen, workers, and farmers demonstrated
much greater judgment and restraint than
in earlier similar periods. Their actions
showed that they had gained understanding
of the causes of our economic situation and
what should be done to improve it. Their
efforts were aided by public policies which
had been developed over the years and had
been improved by experience. Government
measures in such fields as credit and bank-
ing, social insurance, and agricultural price
supports, proved their worth in cushioning
the downswing and lending strong support
to the recovery movement.

This effective teamwork between free
enterprise and Government confounded the
enemies of freedom who waited eagerly, dur-
ing 1949, for the collapse of the American
economy. Our economy continues strong.
We are able to continue and advance the
domestic and international programs which
are the hope of free peoples throughout the
world.

We have succeeded in avoiding a serious
set-back in 1949. We have regained stabil-
ity; but we need more than stability. The
great motivating force in our economic sys-
tem is the perpetual will to move ahead, to
use our skills and our resources more effi-
ciendy, to produce more at lower cost, and
to provide a better and richer life for all our

citizens. The American economy must ex-
pand steadily.

Maximum production and maximum em-
ployment are not static goals; they mean
more jobs and more business opportunities
in each succeeding year. If we are to attain
these objectives, we must make full use of
all the resources of the American economy.

During the past year, we did not do so.
Our success thus far in reversing the forces
of recession cannot hide the high price we
paid for economic instability. The down-
turn brought anxiety and suffering to mil-
lions who became unemployed, and to their
families. It brought failure to many small
businesses. It reduced the opportunities for
the creation of new enterprises. It hurt the
free nations whose continuing revival de-
pends upon trade with us. It caused our
total output for 1949 to be some 10 to 13
billion dollars lower than it would have been
if maximum production and employment
had been maintained.

In earlier economic reports, I emphasized
the dangers of permitting inflationary pres-
sures to continue, and urged measures to
hold them in check. Most of these measures
were not adopted, and the break in the eco-
nomic boom, against which I had warned,
came to pass. Six months ago, the Midyear
Economic Report pointed out the way to
recovery. Additional steps should now be
taken to complete the process of recovery.
We must not again make the mistake of fail-
ing to adopt aflSrmative policies necessary for
continued economic stability and growth.

At present, our economy is moving up-
ward again. But we have not yet reached
the point of fully employing our resources.

Although output is high, some resources
of plant and equipment are not being fully
used. Although employment is large, un-
employment in recent months has been
about 1 54 to 2 million higher than in the
corresponding months of 1948. Further-

[6] Jan. 6

Public Papers of the Presidents

more, our technology, productive facilities,
and labor force are continuing to grow.

If we are to use all these resources, we must
tap the dynamic forces of expansion within
the American economy. One of the most
important of these dynamic forces is the
process of business investment, by which
productive capacity is enlarged and im-
proved. In the fourth quarter of the year,
business investment has not kept pace with
the improvement in economic conditions.
If the downward trend in business invest-
ment were to continue, our prospects for full
recovery and continued expansion would be
seriously endangered.

There is no need for this decline to con-
tinue. There are immense opportunities for
business investment in nearly every segment
of the economy. There are in general suffi-
cient funds available to businessmen who
want to seize these opportunities. The ini-
tiative of businessmen, aided by proper Gov-
ernment policies, can and should soon reverse
the trend of business investment.

Business investment can continue at a
high level only if markets for consumer
goods continue to expand. Price and wage
policies should be directed at enlarging these
markets. For only by broadening the dis-
tribution of goods and services can our busi-
ness system find full use for its expanding
productive capacity.

The events of 1949 demonstrated anew the
basic strength of the American economy.
They also demonstrated that economic affairs
are not beyond human control. We should
now seek to establish a course that will com-
plete the recovery and carry us on to steady
economic growth.

SUMMARY OF THE ECONOMIC SITUATION

Total civilian employment in 1949 aver-
aged 58.7 million, somewhat less than the

average of 59.4 million in 1948, and was
58.6 million in December 1949. Nonagri-
cultural employment fell during the first five
months, reaching a low of 49.7 million in
May. Since that month it has increased at
more than the usual seasonal rate, reaching
51.8 million in December.

Over the year, unemployment averaged
3.4 million, or about 5 percent of the labor
force, compared with 2.1 million or 3 percent
of the somewhat smaller labor force in 1948.
Unemployment at its worst in July 1949
amounted to 4.1 million. In December, it
was just below 3.5 million, 1.6 million more
than in December 1948. There has been a
rapid rise in the number of unemployed
workers exhausting their rights to unemploy-
ment benefits.

Total production of all goods and services
in 1949 was 259 billion dollars. Adjusted
for changes in prices, this was about i per-
cent lower than in 1948, and fell short of
maximum production by 4 to 5 percent, or
10 to 13 billion dollars. The sharpest drop
was in industrial production, which averaged
9 percent lower than in 1948, while agricul-
tural output dropped about i percent. Con-
struction advanced about 5 percent, and
output of electricity and gas rose about 2
percent. There was a gain in the service
industries.

From November 1948, until the low point
of July 1949, industrial production declined
17 percent. Since July the trend has been
upward, interrupted only by work stoppages.
By December industrial production had
regained nearly half of the lost ground.

Prices during the first half of 1949 showed
a general but moderate decline, followed by
relative stability in the second half. Whole-
sale prices by the end of the year were down
7 percent from their level of a year earlier,
and II percent below their 1948 peak. The
sharpest declines were in farm and whole-

Harry S. Truman, ig$o

Jan. 6 [6]

sale food prices. Farm prices are now 23
percent below the postwar peak and 12 per-
cent below what they were a year ago. The
drop in consumers' prices was much more
moderate. By November 1949, consumers'
prices had declined 2 percent below the level
at the end of 1948 and 3 percent below their
postwar peak.

Wage increases were received by a much
smaller number of workers than in previous
postwar years. There was no general wage
pattern. Wages averaged slighdy higher
than in 1948, and consumers' prices were
somewhat lower. One outstanding develop-
ment was the growth of pension and social
insurance plans financed in whole or in part
by empoyers.

Wor\ stoppages in 1949 were about the
same in number as in 1948, but the two
major stoppages, in coal and steel, involved
such a large number of workers that the
loss in man-days of work was about 50 per-
cent greater than in 1948.

Profits were lower in 1949 than in 1948.
For the year as a whole, corporate profits
before taxes and the inventory valuation ad-
justment were 27.6 billion dollars, a drop
of about 21 percent. Much of the loss in
reported profits represented the effect of fall-
ing prices on inventory valuation.

Farm income (realized net income of farm
operators) declined about 15 percent, reflect-
ing the decline in prices. The agricultural
price-support program prevented a much
sharper decline in prices and incomes.

Credit terms generally eased during the
year. Interest rates declined. Business
loans, reflecting the liquidation of inven-
tories, declined sharply during the first six
months but began to advance again in the
latter part of the year. Instalment credit,
after a slight decline in the first quarter,
resumed its advance and reached a new post-
war peak. Most notable was the more than

60 percent increase in automobile instalment
credit during the year.

Consumers' disposable income was slightly
higher in 1949 than in 1948, rising from
190.8 billion dollars to 192.9 billion dollars.
The trend, however, was different, rising
every quarter in 1948 and falling every quar-
ter in 1949. In the fourth quarter of 1949
the annual rate was 191.1 billion dollars.
Unemployment compensation in 1949 con-
tributed 1.9 billion dollars to consumer in-
come, I billion dollars more than in 1948.

Consumer expenditures for goods and
services were remarkably constant through-
out 1949. Their total was 179 billion dol-
lars. This was equal to the total for 1948 as
a whole, but about 2 billion dollars lower
than the annual rate in the second half of
that year. Allowing for price changes, con-
sumers' expenditures represented a slightly
higher volume of goods and services pur-
chased than in 1948. An increased propor-
tion of consumer spending was devoted to*
purchases of services and durable goods, a
decreased proportion to the purchase of non-
durable goods.

Net personal saving amounted to 14.4 bil-
lion dollars, compared with 12 billion dollars
in 1948. During 1949, however, the trend
of saving was downward, from an annual
rate of 16.3 billion dollars in the first quarter
to 13. 1 billion dollars in the fourth. While
personal saving in 1949 was high by any
previous peacetime standards, it is estimated
that about one-third of all families did not
add to their savings, but instead spent more
than they earned.

Private domestic investment in 1949 was
18 percent below the preceding year, primar-
ily because of a shift from accumulation to
liquidation of inventories. By the fourth
quarter, the liquidation of inventories was
slowed down, but investment in plant and
equipment continued to decline. The drop

[6] Jan. 6

Public Papers of the Presidents

in business investment was the principal
feature in the lower level of economic activ-
ity in 1949.

Construction, in spite of a slow start,
exceeded the high level attained in 1948 by

3 percent in dollar volume, and was an im-
portant stabilizing force in the economy.
Public construction increased by 25 percent
over 1948. Private construction declined by

4 percent, but residential construction was
particularly strong in the second half of the
year, rising to a new postwar peak in the
fourth quarter. Housing starts for the year
exceeded 1,000,000, compared with 931,300
in 1948. The number of multi-family units
started was about one-fourth larger than in
1948.

By the end of the year, the rate of total
construction activity was 11 percent higher
than it was a year earlier, and the backlog
of contracts had increased considerably. A
reduction in prices and costs, the easing of
credit, the expanded authority of the RFC
to purchase mortgages, and the renewal of
FHA authority to insure rental projects, all
contributed to the upsurge.

Corporate finance reflected the changes in
the economic situation. The shift from in-
creasing inventories and increasing customer
credit in 1948, to inventory reduction and
a lower rate of increase in customer credit in
1949, permitted corporations to improve
their financial liquidity while continuing
large oudays for new plant and equipment.
Liquid assets increased by 2.5 billion dollars.
Short-term debt decreased by 4 billion, but
long-term debt increased by about the same
amount. In 1949, internal sources of cor-
porate funds were larger than required for
capital investment; in 1948, internal sources
of funds amounted to only about 70 percent
of the requirements for capital investment.

The export surplus (the excess of our ex-
ports of goods and services over our imports)
was only slightly lower in total in 1949 than

in 1948, but it fell sharply in the second half
of the year. This resulted primarily from
a sharp drop in our exports of goods and
services, following severe losses of gold and
dollars by the countries in the sterling area.
The devaluation of foreign currencies sub-
sequent to these losses has so far had little
effect on our economy.

Government fiscal transactions in 1949
helped to stabilize the economy. Cash pay-
ments by governments — ^Federal, State and
local — were about 8 billion dollars higher
in the calendar year 1949 than in 1948. Fed-
eral cash payments alone were 6.2 billion
dollars higher. Nearly half of this rise re-
sulted from the impact of recessionary forces
on such programs as unemployment compen-
sation and agricultural price supports, and
the remainder was mainly the result of larger
expenditures for international and defense
programs. The increase in State and local
cash payments was caused chiefly by higher
expenditures for schools, roads, and other
public works. With increasing government
payments, and with a slight decline in the
gross national product, the ratio of all gov-
ernment payments to total output increased
from about 20 percent in 1948 to 23^4 per-
cent in 1949. Cash receipts declined pri-
marily because of the 1948 cut in Federal
taxes.

As a result of these changes, the cash sur-
plus of all governments — ^Federal, State, and
local — which amounted to over 7 billion
dollars in the calendar year 1948, became a
cash deficit of 3 billion dollars in 1949. For
the Federal Government, the result was a
shift from a cash surplus of 8 billion dollars
to a cash deficit of about 1.7 billion dollars.

UNIFYING PRINCIPLES FOR ACTION

These facts show our tremendous eco-
nomic strength. But this strength does not
rest in material things alone.

Hatry S. Truman, ig$o

Jan. 6 [6]

If we are to continue our economic growth
the major economic groups must all pull
together — businessmen, wage earners, and
farmers must work toward the same ends.
Government, in turn, must carry out the
aspirations of the whole people.

Our success will depend upon the wide-
spread conviction that all groups have a
stake in the expansion of the economy —
that all will share in the benefits of progress.
In the days ahead we must broaden our
understanding of how the various interests
of our people are interrelated.

Toward this end, I should like to point
out certain principles on which we can all
base our economic efforts. The more widely
these principles are understood, the better
able we shall be to solve our common prob-
lems and reconcile the interests of different
economic groups. The more widely these
principles are used as the basis for economic
action and decision, the more rapid will be
our national progress.

First. Our economy can and must con-
tinue to grow.

An expanding population and an increas-
ingly productive labor force require con-
standy expanding employment opportunities
and steadily rising levels of investment and
consumption. Within five years, we can
achieve an annual output in excess of 300
billion dollars. The gain in national income
would be equal to an average of nearly
$1,000 for every family in the United States.
This would greatly improve standards of
living. It would go far toward our goal of
the complete elimination of poverty. It
would provide employment opportunities for
about 64 million workers.

Such prospects are not fanciful. They are
based upon our long-term record of achieve-
ment, including some years when we did
not use fully our resources of plant, mana-
gerial skills, and labor force. And today, we

are better equipped with these resources than
ever before.

But we will not make this progress within
five years unless we begin to move in that
direction now. Our immediate goal for
1950 should be to regain maximum employ-
ment. This requires the reduction of un-
employment to the minimum level consistent
with labor mobility in a free economy. We
should strive this year to reduce unemploy-
ment from 35/2 million to 2 million, or 2^4
million at most. This would mean about
61 million civilian jobs. It would mean
stepping up our national output by about 7
percent above the 1949 total. These are our
objectives for this year under the Employ-
ment Act. If we put forth sufficient effort,
we can reach these objectives before the
year's end.

Second, The benefits of growth and
progress must extend to all groups.

Only in this way can the long-run welfare
of any group be preserved. If any part of
our economy is depressed, or fails to gain,
it can only serve as a drag against the gains
of other parts. There is no room for the
feeling that one group can prosper only at
the expense of another. There is abundant
opportunity for all groups to prosper to-
gether. Expansion to a 300 billion dollar
economy within five years would place 30
to 45 billion dollars more per year in the
hands of consumers for buying the needs
and comforts of life. It would provide op-
portunity for profitable business investment
in plant, equipment, and housing which
might run 3 to 6 billion dollars per year
above the 1949 level. It would enable farm-
ers to sell about 10 percent more food for
domestic consumption.

Third. This growth will not come auto-
matically, but requires conscious purpose and
hard work.

Productivity per worker should be in-

[6] Jan. 6

Public Papers of the Presidents

creased by at least 2 to 2)^ percent a year.
Labor should base its policies on the prospect
of a stable and expanding economy. Busi-
nessmen should base their investment poli-
cies on confidence in growth, shape their
price policies to the needs of larger markets,
and proceed with vigor and ingenuity to
develop new and better products of all kinds.
Farmers should make full use of new tech-
nology, and make shifts in production to-
ward those commodities most needed in a
growing peacetime economy.

To promote an environment in which
businessmen, labor, and farmers can act most
effectively to achieve steady economic growth
is a major task of the Government. It must
perfect measures for helping to stabilize the
economy. It must build up the natural re-
sources which are essential to economic
progress, and expand the protective measures
against human insecurity. It must keep
open the channels of competition, promote
free collective bargaining, and encourage
expanded opportunities for private initiative.

Fourth, The fiscal policy of the Federal
Government must be designed to contribute
to the growth of the economy.

The Federal Budget is an important part
of the national economy. Wise budgetary
policies can promote stability and maximum
production and employment throughout the
economy.

In fields such as resource development,
education, health, and social security. Gov-
ernment programs are essential elements of
our economic strength. If we cut these pro-
grams below the requirements of an expand-
ing economy, we should be weakening some
of the most important factors which promote
that expansion. Furthermore, we must
maintain our programs for national security
and international peace. These programs
are the defense of the world against disaster.
Upon them, our whole future depends.

Government revenue policy should take
into account both the needs of sound Govern-
ment finance and the needs of an expanding
economy. Federal receipts should be suffi-
cient over a period of years to balance the
budget and provide a surplus for debt re-
duction. At the same time, the tax struc-
ture, and the changes made in it from time
to time, should be such as to promote the
amounts and types of investment, consump-
tion, and saving needed for economic ex-
pansion. We should recognize that the ex-
pansion of the economy will generate addi-
tional revenues and strengthen the fiscal
position of the Government.

Fifth, We must deal vigorously with
trouble spots which exist in our economy
even in times of general prosperity.

Special measures are needed to help low-
income groups and, even more important,
to provide them with better opportunities to
help themselves. We must deal with the
particular problems of communities or areas
which are depressed, or whose economic
growth has been retarded. Whenever a
shortage of jobs, or lack of business oppor-
tunity, affects as many persons as it does
today, it is a matter for national concern.
Economic stagnation anywhere is an injury
to the whole economy. We must direct
specific measures to these special problems.

In the light of these guiding principles,
I turn to the consideration of needed eco-
nomic policies.

ECONOMIC POLICIES

Under our system, private and public poli-
cies go hand in hand. Private economic
policies provide motive power of the econ-
omy. Public economic policies provide the
framework for economic activity. Sound
plans for our future grovnh must take ac-
count of both, and blend them to achieve
maximum effectiveness.

Harry S. Truman, ig$o

Jan. 6 [6]

Price and wage policies

The basic economic problem facing the
country now is not to combat inflation. In-
stead it is to increase production, employ-
ment, and incomes to complete the recovery
from the 1949 downturn, and to go on to
the higher levels which will be made possible
by a growing population and rising produc-
tivity.

Business policies concerning prices should
be determined with these objectives in mind.
In general, prices now seem at or near a
stable level consistent with continued ex-
pansion of business activity. There are few
if any major areas in which price increases
would be justified under present circum-
stances. In some outstanding areas, price
cuts are feasible and needed to maintain and
expand sales. Furthermore, technological
progress should in part be reflected in price
reductions from time to time.

Wage adjustments are one historic method
by which buying power has increased with
increasing productivity. These adjustments
are now in the hands of management and
labor. That is where they should remain.
At the same time, the participants in collec-
tive bargaining, particularly in dominant
industries, should recognize that wage ad-
justments affect not only the employers and
workers immediately engaged, but also the
whole economy.

I am glad to note that the Council of Eco-
nomic Advisers is encouraging joint confer-
ences in which representatives of industry,
agriculture, and labor may together study
the economic principles underlying maxi-
mum economic activity. Such conferences
should be productive of improved policies.

Business investment

The large and imaginative programs of
expansion and modernization of plant facili-

ties which have been undertaken since the
war represent a signal achievement by
private enterprise. The trend of business
investment, however, has recendy been
downward, and its continued decline would
be a cause for real concern.

There are tremendous business opportuni-
ties in a growing economy. Not only are
there more people in our country every year,
needing food and clothing, homes and house-
hold equipment, and all the other goods and
services of our bountiful productive system.
Even more important, the results of research
and experience give us every year new and
better materials and productive methods;
new products are constandy being developed,
and whole new industries begun. All these
changes are continually opening up new op-
portunities for productive investment.

There are, in general, ample funds avail-
able to businessmen who want to expand or
build new plants, to replace obsolete equip-
ment, or to extend their operations to new
geographic areas. Banks are in a position
to provide funds for sound loans, and inter-
est rates have been declining. The flow of
institutional savings, such as insurance
premiums, is at record levels. Corporations
as a whole are in excellent financial condi-
tion. While there are real difficulties facing
some businessmen, particularly those whose
enterprises are small or medium-sized, and
those in certain parts of the country, as a
whole there is no general financial bar to a
steady expansion of business investment.

In order to reverse the present downward
trend, and to achieve the rising volume of
business investment consistent with an ex-
panding economy, businessmen should grasp
the opportunities which lie ahead; and
should help to make the adjustments in
prices and incomes which will translate
potential markets into real markets. The
enterprise and imagination of private busi-

41-355—65

[6] Jan. 6

Public Papers of the Presidents

nessmen will be a crucial factor in achieving
the upward growth of which our economy
is capable.

While our primary reliance should be
placed upon private initiative, the Govern-
ment can also help to encourage a reversal
of the downward trend of business invest-
ment. The tax recommendations I shall
transmit to the Congress in the near future
will, in addition to providing some net in-
crease in revenue, propose certain changes
in our tax structure which will make it more
equitable and stimulate business activity.

There is a great need to meet the problems
of small businessmen who cannot now obtain
adequate financing on reasonable terms.
New devices for encouraging private finan-
cial institutions to furnish equity capital to
small and medium-sized concerns are being
studied in the Executive Branch, and I hope
to make recommendations to the Congress
on this subject during the present session.
Meanwhile, I recommend that the Recon-
struction Finance Corporation be authorized
to increase the maximum maturity of its
business loans substantially above the pres-
ent lo-year limit.

Private housing investment

Housing is one of the major fields in which
more investment is required to meet the
growing needs of our people. The level of
housing construction in 1949 was only
slighdy higher than in 1925, despite a much
larger population. The relative lag of hous-
ing technology and various outmoded prac-
tices have resulted in a wide gap between
the cost of producing good housing and the
vast potential market for housing to be
found in the needs and desires of families of
low and middle incomes.

The housing problem requires a vigorous
combination of action by private enterprise
and by all levels of government. Reduction
of housing costs, through technical progress.

better organization, and improved financ-
ing, is imperative. Aside from public sub-
sidized housing, further methods must be
found to enlarge the flow of private capital
into housing. The Federal Government
should supplement the comprehensive hous-
ing legislation, enacted last year, with a new
program to stimulate the flow of low-cost
private money into the development of mid-
dle-income housing, mainly through cooper-
ative and other non-profit ventures.

A high level of residential construction is
an integral part of a generally expanding
economy, and requires not only direct stimu-
lation of investment but also continued
growth in consumer purchasing power.

Rent control

While the preceding recommendations
aim at the fundamental solution of the hous-
ing problem, the increases in rents which
would follow a sudden ending of rent con-
trol would still create severe hardships in a
large number of areas. It would lift the cost
of living, impair consumer buying, and com-
plicate the problem of wage adjustments.
Therefore I recommend extension of rent
control for another year.

Fiscal policy

At the present time the Federal Budget
shows a deficit, principally because of the
drop in incomes and employment in 1949,
the untimely tax reductions in 1948, and the
continuing heavy demands of national secu-
rity programs. As business conditions con-
tinue to improve, we should bring Govern-
ment receipts and expenditures into balance,
and provide some surplus for debt reduction,
at the earliest date consistent with the wel-
fare of the country.

Despite the current deficit, the fiscal posi-
tion of the Federal Government is basically
strong. If the trend of business continues
upward as it should. Federal revenue will

Harry S. Truman, ig$o

Jan. 6 [6]

increase. At the same time, under the poli-
cies I am recommending in the Budget, Fed-
eral expenditures should decline somewhat
over the next few years. This movement
toward a balanced budget should be acceler-
ated by changes in our tax laws which will
reduce present inequities, stimulate business
activity, and yield a moderate amount of
additional revenue.

This reliance upon a combination of three
factors — an expanding economy, all reason-
able reductions in expenditures, and a mod-
erate increase in revenues through changes
in the tax laws — is the wisest course toward
a balanced budget. In the long run, the
Government's fiscal position depends upon
the health of the national economy. It will
not be promoted by drastic slashes in ex-
penditures which are essential to our eco-
nomic growth and to continued peace.
Neither will it be promoted by tax increases
so drastic as to stifle business activity.
Either action would impair our chances for
achieving our major national and interna-
tional objectives and would threaten further
recovery.

Credit policies

To carry out the purposes of the Employ-
ment Act, the Government should be
equipped, as a permanent matter, with the
minimum tools necessary to control the basic
factors of credit expansion.

To eliminate the competitive disadvantage
of Federal Reserve membership, the author-
ity of the Board of Governors of the Federal
Reserve System over bank reserve require-
ments should be revised. The Board should
have broader powers than it now has to in-
crease bank reserve requirements in a period
of inflation. This would be a protective
measure for the entire banking system, and
accordingly should be applicable to all banks
insured by the Federal Deposit Insurance
Corporation.

The Board's authority over instalment
credit ended last June. Since that time the
excessive relaxation of instalment terms of-
fered to consumers has demonstrated the
need for a restoration of the Board's
authority.

I have heretofore pointed out the need
for more effective Government supervision
over speculative trading on the commodity
exchanges. I recommend that the Congress
grant more specific and more adequate au-
thority for this purpose.

Farm policy

A generally pros-perous economy will do
more than all else to help the farmer. As
the economy grows, it can absorb an expan-
sion of total agricultural output, provided the
necessary shifts in amounts and types of dif-
ferent products are made to meet the needs
of a changing peacetime economy. Changes
in our farm policy are needed to accelerate
these shifts in production, to check the de-
cline in farm incomes which has persisted for
more than a year, and to accord to farmers a
fair share of the fruits of prosperity. These
basic objectives of farm policy call for some
shift of emphasis from the support of prices
of particular commodities to the support of
farm income.

There is also need for additional methods
of support. Perishable products, in partic-
ular, cannot be supported satisfactorily by
loans and purchases alone, and yet these are
the products the expansion of whose output
is most desirable. I therefore urge that sup-
port through production payments be
authorized.

Special measures are needed to aid low-
income groups in agriculture. These in-
clude measures to provide credit and man-
agement aids to low-income farmers to help
them enlarge and improve their farms.
They include programs to provide rural
electrification, rural telephones, better farm

[6] Jan. 6

Public Papers of the Presidents

housing, and improved opportunity for
medical care. In addition, we must continue
to improve the education of our farm youth
not only to make them more efficient farmers,
but also to help some of the underemployed
people in agriculture find useful work in
other occupations.

Increased emphasis should be given to en-
couragement of types of farming which are
most needed. Research and education, and
conservation and credit programs, as well as
the Government's support of farm prices
and farm incomes, should be directed toward
this end.

Developmental programs and community
services

After the restraints imposed by war and
by postwar inflation. Federal programs for
resource development, transportation, edu-
cation, and health are just beginning to ad-
just to the needs of an expanding national
economy. Even now, the requirements of
national security, international aid, and
veterans' adjustments are so urgent and so
large that progress in developmental pro-
grams and community services must neces-
sarily be limited to gradual advancement at
a rate below the genuine need.

Nevertheless, we are continuing to expand
our investment in the development of our
rivers for flood control, navigation, reclama-
tion, and electric power, in the expansion of
our highways, and in the development of
atomic energy. I again urge early authori-
zation of the St. Lawrence seaway and power
project, which should be started as soon as
plans can be completed. In most of our
major river valleys we do not have satis-
factory means for preparing integrated
programs of development. I have already
recommended, and I again urge, that the
Congress authorize the consolidation of a
number of Federal activities in the Pacific

Northwest into a Columbia Valley Ad-
ministration.

Present deficiencies in education and
health are so compelling that I repeat my
recommendation for new programs. Ex-
pansion of public health services, and of
enrollments in schools of medicine, nursing,
dentistry, and public health, should be
started now. The growing number of chil-
dren of school age cannot be permitted to
delay their education. I therefore urge the
prompt enactment of aid to elementary and
secondary education, and the provision of
funds for a survey to determine the extent
of the need for school construction. There
should also be authorized a limited program
to assist capable young people who are now
financially unable to secure the higher educa-
tion essential to the full development of their
talents.

Many of the existing procurement, con-
struction, and loan programs of the Federal
Government can be adapted, to some extent,
to alleviate serious unemployment in partic-
ular local areas. The program initiated for
this purpose in the summer of 1949 has
shown some good results and it will be con-
tinued. It is evident, however, that some
localities are faced with long-term rather
than temporary difficulties and that effective
programs to provide permanent solutions
need to be worked out. The Federal Gov-
ernment will continue to use all available
resources for the aid of such distressed areas
and, cooperating with State and local agen-
cies and private groups, will assist in pre-
paring programs adjusted to the long-range
problems and opportunities of those areas.

Social security

In our growing economy, there can be no
excuse for failure to develop an adequate
system for protecting our citizens against
economic insecurity. As we produce more.

Harry S. Truman, ig^o

Jan. 6 [6]

we can and should make more adequate pro-
vision for the aged, those who cannot find
work, and others in our society who are in
need.

I urge the Congress to act promptly on the
recommendations I have made for the ex-
tension and improvement of social security.
We must move rapidly toward a compre-
hensive social insurance system protecting
nearly all workers — including those em-
ployed in farming — ^and their families
against the risks of old age, unemployment,
disability, death of the family wage-earner,
and illness. The costs of such a system,
when measured against the growing output
of our economv, are well within our capacity
to pay.

The present programs of social security are
grossly inadequate. Because of the limited
coverage of the present law, and the exhaus-
tion of benefits by many workers, one-third
of the unemployed are now receiving no
unemployment insurance benefits, and in
some areas the proportion approaches two-
thirds. Many communities provide no pub-
lic funds for the relief of jobless workers
and their families. There are also several
million disabled workers, many with fami-
lies to support, who are not eligible for public
insurance benefits. In some places, they do
not even receive public relief. Only 650,000
of the millions of bereaved or broken fami-
lies with very low incomes are receiving
survivors insurance. Only 30 percent of the
aged population are eligible for social insur-
ance benefits, which are so meager that few
can retire voluntarily. Needed medical care
is denied to millions of our citizens because
they have no access to systematic and ade-
quate methods of meeting the cost.

The current inadequacy of the social in-
surance programs is sharply reflected in the
disproportionate load now being borne by
public assistance programs. Increasing

numbers of the aged, the disabled, and the
unemployed have been forced to resort to
public assistance. This distorts the original
intent of the Social Security Act that people
are entided to security as a matter of right.
The burden of public assistance is straining
the fiscal capacities of State and local govern-
ments. While enactment of proposed social
insurance programs will alleviate this prob-
lem in the future, provision must be made
for dealing with the problem in the mean-
time. I therefore urge enactment of the
proposols which I submitted to the Congress
last spring for the extension and improve-
ment of the program of Federal grants to
States for public assistance.

International economic programs

We are now in a transitional stage in the
development of our international economic
policies. Our short-run programs of aid to
friendly countries abroad have begun to bear
fruit in increased production, expanding
trade, and rising living standards. At the
same time, the long-range nature of the
problems of world production and trade has
emerged more clearly, and the need for the
United States to play a continuing role in
world development through capital and tech-
nical assistance has become evident.

The progress already made toward achiev-
ing the objectives of the European recovery
program and of other short-run aid pro-
grams should prompt the continuation of
these programs on a basis commensurate
with need. To cripple them now would
imperil past progress and risk the waste of
expenditures already made. I recommend
that these programs be extended on a scale
sufficient to accomplish the purposes for
which they were established.

In the years ahead, we must lay increasing
emphasis upon long-run international eco-
nomic programs. We need to move vigor-

[6] Jan. 6

Public Papers of the Presidents

ously toward a world-wide increase of inter-
national trade. This will result in larger
imports into our country, which will assist
other countries to earn the dollars they need,
and will at the same time increase our own
standard of living. An immediate step in
this direction is to approve promptly the
proposed Charter for the International Trade
Organization, which has been negotiated to
establish a code of fair trade practice and a
means for steadily improving international
commercial relations.

Even the maximum feasible reduction of
barriers to world trade would not alone make
possible the continued increases in world
production and living standards which are
essential to world peace. Such reductions are
of litde immediate benefit to the underde-
veloped areas of the world, which cannot
produce enough to achieve an export surplus
and build up their productive capital. These
areas urgendy need improved technical
knowledge and increased capital investment.
The aim of the Point Four program for
assistance to underdeveloped countries is to
help meet these needs.

To make the most effective use of invested
capital, underdeveloped countries require
technical assitance. Hearings have already
been held by the Congress on the legislation
I have recommended to stimulate the inter-
change of technical assistance. I urge action
on this proposal as soon as possible.

The United States has sufficient productive
strength to provide capital for investment in
productive developments abroad. In order
to encourage the private investment of
United States funds abroad, I urge the Con-
gress to act promptly on the legislation now
before it to authorize the Export-Import
Bank to guarantee such investments against
certain risks peculiar to foreign investment.
Through the negotiation of treaties, the Gov-
ernment is moving to improve conditions

for investment abroad and assure protection
for the legitimate interests of United States
investors. It will also continue to be the
policy of the Government to encourage
American investment abroad only when it is
carried on in a way that protects the interests
of the people in the foreign countries con-
cerned.

I recommend also that certain provisions
of the tax laws governing the taxation of
income from foreign investments be revised
in order to stimulate the flow of American
capital abroad.

In addition to its direct contribution to in-
creased production, the technical assistance
program should prepare the way for, and
stimulate the preparation of, concrete de-
velopment projects, on the basis of which an
increasing volume of private and public
investment can be made. It is unlikely that
private funds, including those invested
through the International Bank, and the
present resources of the Export-Import Bank,
will be sufficient to meet the need for invest-
ment abroad. It will probably become nec-
essary at a later time to increase the lending
authority of the Export-Import Bank.

SUMMARY OF LEGISLATIVE RECOMMENDATIONS

I summarize below the legislative recom-
mendations contained in this Economic Re-
port, and urge that the Congress enact them
into law:

1. Make some revisions in the tax struc-
ture to reduce present inequities, stimulate
business activity, and yield a moderate
amount of net additional revenue. My spe-
cific recommendations on taxes will be
transmitted to the Congress at an early date.

2. Enact a new program to stimulate pri-
vate investment in housing for middle-in-
come families.

3. Substantially increase the maximum

Harry S. Truman, igp

Jan. 6 [6]

maturity period for business loans made by
the Reconstruction Finance Corporation.

4. Improve the protection of farm incomes
and encourage needed shifts in farm produc-
tion, by authorization of production pay-
ments and other changes in present legisla-
tion.

5. Establish a Columbia Valley Adminis-
tration, and authorize the St. Lawrence
seaway and power project.

6. Provide for Federal aid to elementary
and secondary education, for a limited pro-
gram of aid in support of higher education
for capable students, for aid to medical edu-
cation, for the improvement of local public
health services, and for grants to States for
surveys of the need for school construction.

7. Extend and liberalize the social security
structure by improving old-age, survivors,
and unemployment insurance, enacting dis-
ability and health insurance, and expanding
Federal grants-in-aid to States for public
assistance.

8. Extend rent control for another year.

9. Continue the foreign recovery programs
on a basis commensurable with need.

10. Approve the Charter for the Interna-
tional Trade Organization.

11. Authorize the program for technical
assistance to underdeveloped countries, and
for guarantees by the Export-Import Bank
against risks peculiar to private investment
abroad; and revise certain provisions in the
tax laws governing the taxation of income
from foreign investments.

12. Provide additional authority over
banking reserves to the Board of Governors
of the Federal Reserve System; extend that
authority to all banks insured by the Federal
Deposit Insurance Corporation; and restore
the Board's authority to regulate consumer

credit. Provide authority to regulate specu-
lation on the commodity exchanges.
*****

In the Message on the State of the Union,
I have stressed the fateful role which the
United States has come to occupy in the
progress of human destiny. Our responsi-
bilities are already determined by the course
of world events. But how well we measure
up to these responsibilities remains in our
own hands.

Moral leadership comes first, as we seek
to inspire free men everywhere with con-
fidence in their cause. But history proves
that many great moral purposes have failed
or faltered because the material strength to
support them was lacking. The economic
power of the United States, at its full poten-
tial, is the keystone of this support.

The Congress foresaw this when it gave
our national economic policy the degree of
central significance accorded to it under the
Employment Act of 1946. As the delibera-
tions of the United Nations demonstrate,
other nations recognize the overwhelming
importance to the cause of freedom of wise
economic policies and full employment.

Our economic situation today is good, and
it can be better. The lessons of the past and
the magnificent challenge of the future con-
tinue to spur us on. For all to thrive and
prosper together, all must work together —
with mutual understanding and common
purposes. That is the spirit of our democ-
racy. That is the spirit in which I transmit
these recommendations to the Congress, and
to all those whose actions affect our economy.
Harry S. Truman

note: The message and the complete report are
published in "The Economic Report of the President
Transmitted to the Congress, January 6, 1950"
(Government Printing Office, 1950, 194 pp.)»

[7] Jan. 6

Public Papers of the Presidents

7 Exchange of Messages With Michael, Orthodox Archbishop of
North and South America. ]anuary 6, 1950

IN RESPONSE to your appeal, I am glad
to assure you that the United States will
continue to give the utmost support to the
efforts of the United Nations and the inter-
national Red Cross organizations to bring
about the return to Greece of the thousands
of children removed from that country to
eastern Europe during the course of the
recent guerrilla v^arfare. The people of the
United States, and particularly the mothers
of the United States, are deeply sensitive
to the plight of these children and their
bereaved families. We pray that the Gov-
ernments of the countries harboring these
children v^ill be moved by a spirit of broad
humanitarianism to cooperate in fulfilling
the unanimous desire of the United Nations

General Assembly that these children be
promptly restored to their homes.

Harry S. Truman

note: Archbishop Michaers message, dated Decem-
ber 28, 1949, follows:

Just from Greece as the new spiritual leader of
the Greek-American Orthodox people in your and
our prosperous and beloved country, I make today
an appeal to the civilized humanity and generous
American people for the return to their parents of
the abducted Greek children. Our Orthodox people
here and in Greece who are so grateful to you and
to the American people for all given assistance will
count very much on your personality. Will you
please exercise all your high influence upon the
members of the United Nations so that these Greek
children are returned to their homes.

Michael,
Archbishop of North and South America

8 The President's News Conference on the Budget.
January 7, 1950

[As the conference opened, Charles G. Ross, Press
Secretary to the President, made the following state-
ment: "As you all kpow, this seminar is just for your
guidance, for hack^round purposes, and not for
attribution. And when you as\ your questions, will
you please always refer to the page number of the
Message."']

THE PRESIDENT, [i.] I would like to tell
you first about this group of charts here.
Has everybody got one of these charts?

If you will notice, the first chart points
out the receipts and expenditures, where they
come from and where they go. Then there
is this chart here, which shows the reverse
of it, the way the distribution of expenditures
is made — since 1939 — which is exacdy re-
verse — very informative. And the next one
shows where the money comes from and
where it goes; and the next one is on the
same line. That last one is the big one —

where I was pointing to in the pictures they
just took — it shows what happens in an
emergency like we have been through since
1938. And the last end of that chart shows
what we are trying to do to keep from get-
ting that big a hump again.

I want to call your attention particularly to
part 3 in this green book, which gives you
some idea of the Government's assets and
investments made over the years, which has
not before been pointed out. All these
people that yell about expenditures don't
understand that a tremendous amount of the
expenditures we make is an investment in
the United States of America, and if those
investments were not made we would not be
on the income basis that we are on now, so
far as the individual and the business of the
country is concerned.

Harry S. Truman, ig^o

Jan. 7 [8]

I think those are all the preliminary re-
marks that I want to make.

Mr. Ross: Mr. President, may I say again
that these remarks are for guidance and for
background purposes, not for attribution,
which is customary at these seminars.

THE PRESIDENT. He wauts me to impress
on you that these statements that I make are
for guidance and background and not for
personal attribution to the President. I think
all of you understand that, particularly those
who have been here before.

Mr. Pace: You might also ask that when
they ask a question that they refer to the page
number.

THE PRESIDENT. The Budget Director
wants the page number referred to when
you ask a question, and it will make it easier
for us to answer. You can proceed now.

[2.] Q. Mr. President, on page M78
(p. 99)^ you have a reference to Federal re-
insurance for unemployment compensation,
I believe the amount is about $i2i/2 million.
Does that represent an amount of money to
be actually made available for payment of
unemployment compensation benefits?

THE PRESIDENT. The Budget Director will
answer that. I wish you would stand up
when you ask your questions so that we can
hear you better.

Mr. Pace: Could you repeat that question,
please?

Q. Yes. On page M77, M78, M85, and
A83 (pp. 99, 100, 105) you will find refer-
ences to a Federal reinsurance program for
unemployment compensation, part of that
administration, part of it compensation. I
wonder whether the bulk of that is money

^Page references in parentheses, throughout this
news conference, indicate where the subjects re-
ferred to may be found in the Budget Message as
printed in Item 9, below; all other page references
correspond to the page numbers in the Budget as
published in House Document 405 (8ist Cong., 2d
sess.).

actually to be made available to pay unem-
ployment compensation benefits?

Mr. Pace: The answer to that is it would
be, if the States need it.

Q. It wouldn't?

Mr. Pace: Would be.

Q. In that answer, how can you tell me
how much is administration and how much
for benefits?

Mr. Pace: Almost entirely for benefits.

[3.] Q. Now, you mention that there are
one or two States where the reserve may be
exhausted by next fall, or shortly thereafter.
Would you name those States?

Mr. Pace: We can give you those over
in the office, when you come over.

Q. Thank you.

[4.] Q. Mr. President, on page M21
(p. 57), under assistance to China, you have
got nothing down for 1950, and, if I have
got the right program, I think Congress
voted 75 million. Is this an indication

THE PRESIDENT. Yes, I have still got that
$75 million locked up in the drawer of my
desk, and it is going to stay there.
[Laughter]

John ^ says he might break the desk down.

[5.] Q. Mr. President, I would like to
ask one for the record. How much is a
moderate tax increase?

THE PRESIDENT. I wiU auswer that ques-
tion in the tax message, in language so that
you can understand it without a bit of
trouble.

Q. Mr. President, when does the tax mes-
sage go to Congress?

THE PRESIDENT. We are preparing it right
now. I hope it will be ready in a few days.

Q. Will it go Monday?

THE PRESIDENT. I Cau't — UO, it WOu't gO

Monday. This message only will go down
on Monday.
Q. What I mean is, we are writing stories

^ Secretary of the Treasury John W. Snyder.

41-355—65-

[8] Jan. 7

Public Papers of the Presidents

today on the budget. Will the tax message
come along Monday to change the lead for
the story?

THE PRESIDENT. No, no. You Spend your
time on the budget, and there will be plenty
of time to work on the tax message. We
are going to have it ready just as prompdy
as we can.^

[6.] Q. Mr. President, on occupied re-
lief — ^ERP — ^how much is ERP in this 3,250,-
000 — ^3 billion — that is, M21 (p. 57)?

Mr. Pace: The answer to that is that the
German relief is included in ERP this year.
Last year it ran approximately 400 to 450
million. This year, then, would obviously
run slightly less than that if it were set out
as a separate category; but it is included in
ERP operations this year.

Q. That would reduce ERP about 2
billion, eight?

Mr. Pace: If it were set out independ-
ently — I can't specify exactly how much goes
for Germany because there would be some
reduction last year. If you used last year's
figures it would make it about that amount,
but that is not an exact figure for this coming
year.

Q. What is the correct figure, then, to use
for the amount to be asked for, for ERP for
the economic

THE PRESIDENT. It is Set out right there.

Mr. Pace: The figure set out here, because
that is one of ERP's responsibilities this year.
In other words, if you were going to show
that Germany was actually included in ERP,
you could state what part of the actual figure
of ERP is the one set out here.

[7.] Q. Mr. President, on page M36 (p.
68), the last sentence of the next to the last
paragraph is very interesting: "We should
provide through the veterans' programs
only for the special and unique needs of vet-

MtemiS.

erans arising direcdy from military service."
Can that be taken as a recommendation to
repeal laws concerning nonservice-connected
disabilities?

THE PRESIDENT. That sets out exactly what
it means right there.

Q. That would very greatly reduce vet-
erans administration costs?

THE PRESIDENT. Not Very greatly. It
would reduce it, to some extent, but it would
prevent it from piling up at a terrific rate,
which we anticipate later.

Q. Would also relieve largely the pressure
on veterans hospitals ?

THE PRESIDENT. Yes, to some extent it
would.

Q. Thank you, sir.

Q. On that very point, is this not an
argument against general pension legisla-
tion?

THE PRESIDENT. Yes. Yes, that is exacdy
what it is for. That is exacdy what it is for.
We would all be paying pensions to our-
selves if this thing gets spread out too thin.
The Budget Director calls attention to the
fact that it has been the policy all along, that
sections of the GI bill of rights legislation
to stop — heads off the general pension plan.
I think it has done a remarkable job for the
returned veterans, and I think they all think
so, too.

[8.] Q. Mr. President, this— the ques-
tion of policy, do you have any personal
objection, or any administrative objection, to
Congress handling your Budget in a single
appropriation bill?

THE PRESIDENT. The Cougress has been
discussing that matter for quite some time.
I would be perfccdy happy if they would
take this budget and pass it as a whole, just
like it is. [Laughter']

Q. Mr. President, that was hardly the in-
tent of the question.

Harry S. Truman, ig§o

Jan. 7 [8]

THE PRESIDENT. I didn't Understand you?

Q. That was hardly the intent of the ques-
tion. [More laughter]

Q. Mr. President, you said you were going
to submit about $7 biUion in estimates later,
and about $33 billion at this time. I think
that is

THE PRESIDENT. No, this is the budget
right here before you. This is the budget
we — that we are submitting. This is the
budget document here that goes to Congress.
I don't think there is anything in addition to
this green book.

Q. My question was, how would that af-
fect the single package appropriation bill?

THE PRESIDENT. I dou't think it would
affect it at all. I don't think it would affect
it at all. That is a matter for Congress itself
to decide. I can't tell them how to handle
the budget. All I am interested in is that
they don't treat it as they did last year. A
lot of them have to be elected this year and
they had better get that appropriation bill
through in a hurry.

[9.] Q. Mr. President, will you accept a
single package bill with the item veto?

THE PRESIDENT. I havc always been in
favor of the item veto. It requires, I under-
stand, a constitutional amendment to have
an item veto, and I don't think there is any
possible chance of getting that in this budget,
or any other one for several years to come.

[10.] Q. Mr. President, getting back to
the overall figure, please, on page M5
(p. 45) — the digest figures for the 195 1
budget.

THE PRESIDENT. YeS?

Q. 42,439 — ^that is existing and proposed
legislation?

THE PRESIDENT. That's right. That is the
whole thing, existing and proposed legisla-
tion.

Q. That, of course, does not include the

social security collections and payments?

THE PRESIDENT. Oh no, that is a separate
account.

Mr. Pace: It does include railroad retire-
ment.

Q. It does include it?

Mr. Pace: It does include railroad retire-
ment. That is included in the trust funds.

Q. Then the 37.3 of revenue is without
any anticipated change in the — ^without
change in the existing

THE PRESIDENT. That is cotrect.

Mr. Pace: That is correct.

THE PRESIDENT. What is it?

[11.] Q. Mr. President, on page M43
(p. 73), in relation to social security, you
say, "The greater part of them would be
financed through special taxes. . . ." What
kind of special taxes do you mean?

Mr. Pace: Payroll.

THE PRESIDENT. Payroll taxes, that is what
is referred to.

Q. Payroll taxes ?

THE PRESIDENT. That's right.

Q. Mr. President, page M48 (p. 77), you
propose that a payroll tax of one-fourth of i
percent be placed on employers and em-
ployees effective January i, 1951. Does the
receipts side of the cash budget reflect that
increase, and the increase in health
insurance?

THE PRESIDENT. Budget wiU have to
answer that.

Mr. Pace: The answer to that is that it
would be reflected in the cash budget, but
would not be reflected in this budget, which
is known as the conventional type budget.

Q. But it is reflected in the cash budget
that you have in the statement?

Mr. Pace: That is correct, yes. That is
correct.

[12.] Q. Mr. President, on pages M68
and M69 (pp. 92, 93), there is a discussion

[8] Jan. 7

Public Papers of the Presidents

of the high subsidies for the United States
Maritime Commission for shipbuilding.
My question is whether the issue, or whether
the subject of the effect of the deflation of
British currency on shipbuilding and ship-
building subsidies was considered in sum-
ming up this question?

THE PRESIDENT. We work in American
dollars entirely.

[i3«] Q' ^^' President, on that — right
across the page, M69 (p. 93) — you have got
proposed legislation for the postal deficit,
395 minus. Apparently that refers to legis-
lation for increasing the postal receipts on
mail, not subsidies?

THE PRESIDENT. That's right.

Q. Have they worked that out yet?

Q. It was 250. You said that was not
enough.

THE PRESIDENT. No, it is not euough. It
is increasing all the time — all the time.

Q. Have you worked that out?

THE PRESIDENT. The Postmaster General,
I think, has the figure all ready to send to the
Congress.

Mr. Pace: I think he is working on it at
the present time.

THE PRESIDENT. The Budget Director says
that the Postmaster General is working on it
at the present time, but I have discussed the
matter with the Postmaster General and I
know that he is going to ask for what it takes
to meet that deficit.

Q. Have you talked to the congressional
leaders about it?

THE PRESIDENT. Yes, I have. And I have
also talked to a number of newspapermen,
and some commentator fellows, and fellows
who have the right idea think that it ought
not to be a subsidy. The thing has run at
nearly $3 billion over the last 20 years.
Those fellows using the subsidies — that's all
right for them — ^but they yell about some
other subsidies. I think they, too, ought to
be met. [ Laugh ter ]

[14.] Q. Mr. President, this is probably
a question for the Budget Director: what is
the cash budget?

THE PRESIDENT. We have that argument
every year. The cash budget is what — the
cash payments

Q. I mean the figures.

THE PRESIDENT. that the Government

has to pay out — ^that the Government has to
pay out over previous years.

Q. You didn't understand my question
properly.

THE PRESIDENT. All right, give it to him.

Q. The overall figure, outgo and income?

THE PRESIDENT. All right, we will give it
to you.

Mr. Pace: If they will go on with the
questions

THE PRESIDENT. Go ahead with the ques-
tions. As soon as we get the figures we
will come back and answer you.

[15.] Q. M85 (p. 105)— Inland Water-
ways Corporation — $3 million — I can't find
it in the big budget.

THE PRESIDENT. It must be in there.

Q. No, it isn't — ^550 in the big budget.
It is apparendy new legislation?

THE PRESIDENT. On M85 ?

Q. Under Transportation and Communi-
cation — Inland Waterways Corporation —
estimated expenditures — ^$3 million?

Mr. Lawton: That is to raise capital stock.

Q. What are you going to do with it?

Mr. Lawton: Improve facilities of the In-
land Waterways Corporation.

Q. That has not been approved by Con-
gress — not authorized?

Mr. Lawton: Not yet.

Q. It has not been authorized?

Mr. Lawton: No.

THE PRESIDENT. I don't think it has been
authorized, but we are asking for it here.

[16.] Mr. Pace: The answer to the previ-
ous question, Mr. President, is that the
whole figure is set out on page A117 — ^the

Harry S. Truman, ig^o

Jan. 7 [8]

whole summary and supporting tables — on
table 13 on page A117 of the cash budget.
That will answer not only your final ques-
tion but any detailed questions, on page
A117.

Q. $45 billion against $43 billion?

Mr. Pace: That's right.

Mr.Lawton: That's correct.

[17.] Q. Mr. President, on page M85
(p. 105), on your proposed legislation there is
an item of half a million dollars for research
in utilization of salt water; and on another
page, under national resources, the same item
is listed at a million dollars. I wonder if
those could be reconciled?

THE PRESIDENT. Can you reconcile them,
Mr. Budget Director?

Mr. Pace: The answer on that is that
unfortunately in your tables you have to
round the figures, and this is purely a ques-
tion of rounding. The statement and your
tables is a rounded figure. The statement
in your direct quotations is an accurate
statement.

Q. Which one is the one that will be used,
Mr. Pace?

Mr. Pace: The one in the text and not in
the tables.

Q. The one not in the list of proposed
legislation?

Mr. Pace: That is correct.

Q. That would be a million dollars, then?

Mr. Pace: That is correct — that is correct.

[18.] Q. Mr. President, can you tell us
the figure of the national income?

THE PRESIDENT. $212 billioU.

Q. Is that for both fiscal 1950 and 195 1?

Secretary Snyder: That is correct. Aver-
age annual personal income paid to the indi-
vidual.

Q. 212?

Secretary Snyder: 212.

Q. Is that for fiscal

Secretary Snyder: 195 1, and also in the
adjusted figure for 1950.

[19.] Q. Mr. President, what is the prob-
able figure on total national output on what
we call national income ? That is a different
figure from the personal income figure.

THE PRESIDENT. That includcs corpora-
tions, and everything. I think the total
figure includes all income — this is personal
income.

Q. Comparable figure to the one used in
the Economic Report?

THE PRESIDENT. Between 255 and 260
would be your figure that you are talking
about.

[20.] Q. Right along that line, what
level of employment or unemployment are
you assuming?

THE PRESIDENT. That is set out in the
Message on the State of the Union, and I
would invite you to read it.*

Q. Yes, sir.

[21.] Q. This budget, then, is predicated
on no change in personal or national income
in this coming fiscal year?

THE PRESIDENT. That is correct, at present
levels.

Q, At present levels.

[22.] Q. Mr. President, is your ERP
given here a final estimate, or is that subject
to change?

THE PRESIDENT. It is subjcct to changc, of
course.

Q. Well, Mr. President, you said it's on
present levels. On A4

THE PRESIDENT. A4?

Q. Yes — direct taxes on individuals is
higher in 195 1 estimate than in 1950 esti-
mate. Apparently you think 195 1 is going
to be better than 1950?

THE PRESIDENT. Well, I hopc it wiU be.

Q. You just said it was based on 212?

THE PRESIDENT. Right.

Q. Well, how do you get the difference?
Secretary Snyder: Well, there are a num-
ber of adjustments there that in the 1950 —
* Item 2.

[8] Jan. 7

Public Papers of the Presidents

in making the adjustments, that changed
the taxes.

Q. It might be that you had a coal or steel
strike which would cut down corporation
incomes in 195 1?

Secretary Snyder: We certainly don't
want one.

Q. Has that been taken into considera-
tion?

Secretary Snyder: That has been shown
in the corporate profits, and in the individual
incomes.

[23.] Q. Mr. President, I need clarifica-
tion on page M84 (p. 104) — estimated ex-
penditures for European recovery. The fig-
ure is given as i billion, 7.

THE PRESIDENT. I didn't Understand your
question. Please repeat it.

Q. I would like to have clarification of
the figure of i billion, 7 — estimated 1951
expenditures on European recovery program
and other foreign aid?

Mr. Pace: That is the part that comes out
of the new appropriations. The other is
carryover appropriation, making the two
totals the same. In other words, this is the
new part that will come out of the new
appropriation. A large part will be carry-
over from old appropriations. Thus a mil-
lion, 550 will be a carryover from old appro-
priations. This will be the amount of
expenditures that will come out of appro-
priations asked this year.

Q. Thank you.

Q. Mr. President, then the only new
money is that on page i, I guess it is — ^40
billion —

THE PRESIDENT. Which page is that ?

Q. M5 (p. 45), I guess.

THE PRESIDENT. That's right.

Q. One more question, is that $25 million
item in there the only immediate expendi-
ture contemplated for point 4 ?

THE PRESIDENT. YeS.

Q. $45 million.

THE PRESIDENT. YeS.

Q. Thank you.

THE PRESIDENT. The Budget Director calls
attention to the fact that the operational
figure for 1951 is substantially below the
operational figure for 1950 — about $3 bil-
lion — ^which would have its effect on future
years.

Q. Mr. Pace, could I come back to that
question about that billion, 7 on ERP? I
am still mixed up about that. Does that
billion, 7 come out of the 3 billion, i total
new appropriations?

Mr. Pace: That's right. That's right.
That is the part that will be expended out
of that cash payments. That's the distinc-
tion between these payments and appropria-
tions. Thus, appropriations for the 3
billion, 2 and the i billion, 7 is the amount
of money that will actually be paid out in
the year 195 1 out of that new appropriation.

Q. Where does the balance come?

Mr. Pace: The balance comes from 1950.

Q. From the 1950?

Mr. Pace: That's right. It's a carryover
there, as it always is, which is the really
confusing thing about this Federal budg-
etary process.

[24.] Q. Do you have an expenditure
breakdown for the Army, Navy, and Air
Force?

THE PRESIDENT. YeS.

Q. There is an appropriation breakdown
which I couldn't find — an expenditure
breakdown.

THE PRESIDENT. You wiU find a table in
there — ^when I was running through it last
night — ^I think table 8 covers it. You will
find that under different headings in all the
Government. You will find it under table 8.

Mr. Pace: Table 8— -A63.

THE PRESIDENT. 63 — A63 — ^you will find
all those things covered in every branch of
the Government in table 8.

[25.] Q. Mr. President, on M18 (p. 54),

Harry S. Truman, ig^o

Jan. 7 [8]

second paragraph, "In 195 1, about $2.5 bil-
lion of the increase in the debt will be
financed by new investments in Federal secu-
rities by trust accounts and other Govern-
ment agencies." Does that mean that 2
billion, 5 will be asked by public financing?
Is that the only other way you can get it?

Secretary Snyder: That is the difference,
yes.

Q. New public financing?

Secretary Snyder: That is correct.

Q. Will the war bonds meet that, or will
that — not war bonds, savings bonds— —

Secretary Snyder: Savings bonds.

Q. Yes.

Secretary Snyder: We have not deter-
mined what category — whether short term,
long term, or intermediate term, but

Q. Public.

Secretary Snyder: ^if the necessity for

additional funds comes up, we will give con-
sideration to additional types of securities.

Q. Mr. Secretary, you will expect the sav-
ings bonds to take as much of that as possi-
ble, will you not?

Secretary Snyder: Well, the savings bond
is of course part of our overall financing
program, and they have been effectively
carrying a pretty good part of the general
distribution of our sales, because up to right
now we are still selling more savings bonds
than the redemptions are taking out.

Q. On page M

Secretary Snyder: We are not using sav-
ings bonds to any specific purpose. It is just
part of the general revenue of the budget.

THE PRESIDENT. What is it you want to
ask?

[26.] Q. M31 (p. 64):— "While no new
obligational authority is recommended in
this Budget" for ships — new ships — I imag-
ine they go 2 or 3 years ahead, don't you,
on laying keels, etc.?

THE PRESIDENT. YeS.

Q. But no new ships contemplated under
the budget?

THE PRESIDENT. That is correct — that is
correct.

[27.] Q. Mr. President, is there anything
in the message to indicate when you expect
to balance the budget, in what year?

THE PRESIDENT. No. No, I am uot that
much of a prophet.

[28.] Q. Well, Mr. President, the Budget
Director said that the obligations would
be about $3 billion — ^request for obligations —
about $3 billion less than last year. Can you
give us a breakdown on which specific items
were cut down?

Mr. Pace: I can't give it to you here. I
can give it to you over at the oflSice. I think
probably it is set out in the table here.

THE PRESIDENT. It's iu oue of these tables —
I saw it — but I can't remember which one.
It is set out in one of those tables.

Mr. Pace: If you will take a look at table
3 — ^pardon me — on pages 96 and 97 — ^it will
give you the general picture. Take a look
at the recap on A7, it will give you the
figures you need.

[29.] Q. Mr. President, in looking over
Treasury, I was unable to determine any
item that would show the cost of the silver
purchase program during the year. Is that
broken down in any way in the budget?

THE PRESIDENT. Did you use those figures?

Mr. Pace: We haven't got a breakdown of
that in here, no.

[30.] Q. How much additional revenue,
Mr. President, would the proposed payroll
tax increase on January i, 1951, bring in?

THE PRESIDENT. I cau't tell you offhand, I
don't know. The Budget Director can get
it for you.

Mr. Pace: Yes, I can get that.

[3^*] Q« M^' President, on page Mi 8
(p. 54), coming back to the reference to
$254 billion, new investments by Govern-

[8] Jan. 7

Public Papers of the Presidents

mental agencies, does that mean that the
proposed tax increase would have an upper
limit of 2.6 to meet the i.i deficit?

THE PRESIDENT. I wiU auswer that in the
message on taxes which I am getting ready
right now.

[32.] Q. Mr. President, on page A49,
Federal Security Agency, public health, aid
to local public health, etc., are those figures
all based on the three bills now in the
Congress?

Mr. Pace: That is correct.

THE PRESIDENT. That is correct.

Q. Will you have that again?

THE PRESIDENT. You Wanted to know if
these figures for the public health on page
A49 were based on pending legislation?
They are.

Mr. Pace: That is correct.

[33'] Q- M^' President, on page 1114,
the special section you refer to in the begin-
ning

THE PRESIDENT. YeS.

Q. on investments, you have a figure

in the first paragraph of page 1114 of 8.7
billion for Federal assets. In your message
on page Mi 2 (p. 49), you have a figure of 5.6
billion. Is the only difference that the mili-
tary public works are excluded?

THE PRESIDENT. The budget will have to
answer that for you.

Mr. Pace: Military public works and
equipment are excluded.

Q. That is the only difference?

Mr. Pace: That's right. Although they
are returnable, they are separated for the
purposes of determining what actually is a
return on the investment.

[34.] Q. Mr. President, I would like to
get this cleared up. On page M57 (p. 84),
about two-thirds down the page, "As a step
toward correcting this situation, I shall trans-
mit to the Congress a legislative proposal to
authorize a limited Federal program to assist
capable youth who could not otherwise do

so to pursue their desired fields of study at
the institutions of their choice." Those are
Federal scholarships?

THE PRESIDENT. M57? Wait a miuute, I
haven't found it yet.

Q. About two-thirds down.

THE PRESIDENT. "This Budget includes

Q. No, the sentence above that.

THE PRESIDENT. "As a Step toward cor-
recting this situation, I shall transmit to the
Congress a legislative proposal to authorize
a limited Federal program to assist capable
youth who could not otherwise do so to
pursue their desired fields of study at the
institutions of their choice." This is about
as plain as I can make it.

Q. Federal scholarships? That's a new
one on me.

Mr. Pace: It's higher education.

Q. I know. College education.

Mr. Pace: That's right.

Q. Any plans worked out for that — who
will get it?

THE PRESIDENT. No.

Q. How it will be distributed?

THE PRESIDENT. The details have not been
worked out.

Q. Has the amount been decided on ?

THE PRESIDENT. No. The cxact figure has
not been worked out.

Q. Going to be, then, a sort of informa-
tion on the national education?

THE PRESIDENT. When we get the details
worked out, I will give it to you in a printed
statement of what I hope to do.

Q. Does the budget include that figure,
sir?

THE PRESIDENT. A million dollars. In-
cludes a million dollars.

Q. Only a million?

THE PRESIDENT. That's Hght.

Mr. Pace: That is just to establish the
organization.

Q. How many do you expect to take care
of?

Harry S. Truman, ig$o

Jan. 7 [8]

THE PRESIDENT. That is to sct Up the or-
ganization. Don't expect to take care of a
one.

Q. Well then, will that not be, sir, an
additional budget figure, an additional ap-
propriation upon the budget?

THE PRESIDENT. It might be. Whenever
it gets into operation. Of course, it is not
in this budget. I don't think we will have
any call for it in this budget. But it will
be added to the budget whenever we are
ready to operate.

Q. In other words, operations will begin
after fiscal year 195 1 ?

THE PRESIDENT. I think SO. 1952. It sets
out in M57 (p. 84) that it might begin in
fiscal year 1952.

Q. Mr. President, Mr. McGrath ^ of the
Office of Education has recommended $300
million for that program annually. Are you
prepared to go that high for it?

THE PRESIDENT. I am not prepared to make
any statement on the subject now.

[35-] Q' J^r« President, on page M29
(p. 63), you refer to the maintenance of six
Marine Corps battalion landing teams.
Does that indicate a change in the status of
the two divisions?

THE PRESIDENT. Will you repeat that ques-
tion?

Q. On page M29 (p. 63), you refer to
maintaining six Marine Corps battalion
landing teams. Does that indicate abolish-
ment of the two divisions they now have?

THE PRESIDENT. I think you will have to
ask that question of the Secretary of Defense.
I myself can't answer it.

[36-] Q« Mr. President, on M80 (p.
10 1 ) — that chart — Bureau of Internal Reve-
nue, Treasury — ^$253 million — is that for the
checking up of income tax returns?

THE PRESIDENT. That's right. It's for en-
forcement. Additional employees for en-
forcement.

''Earl J. McGrath, Commissioner of Education.

Q. That is a — it has not been authorized
has it, that is my recollection?

THE PRESIDENT. It has been asked for in
present appropriations, but it has not been
authorized yet.

Q. Mr. President, is that 3,000 additional
employees?

Secretary Snyder: Approximately 3,000.
It's 2,960, something like that. Approx-
imately 3,000.

THE PRESIDENT. It wiU bc a good invest-
ment for the Government. I think we will
take in a billion or a billion and a half more
in taxes if we get that through.

[Long pause here]

What's the matter with you people this
morning? [Laughter] Is this thing so
plainly gotten up that no questions are nec-
essary? Go ahead back there?

[37.] Q. Mr. President, on M18 (p.

54) —

Q. Mr. President

THE PRESIDENT. Just a miuute. What's
the page now?

Q. Ml 8 — on the Public Debt — do you
have any idea how high you can go with
safety on that?

THE PRESIDENT. There are a lot of guesses
on that, as high as 278 — ^280, the Secretary
of the Treasury says.

Secretary Snyder: I have been trying my
best to get to the point where we can pay
some of that debt off.

THE PRESIDENT. We did pay $26 billion
on it, if you remember, but a certain Con-
gress came along and raised Cain with it

Q. Which one was that?

THE PRESIDENT. but we are going to

make it, some day.

Q. Mr. President, regarding the public
debt, what do you regard as a danger point?

THE PRESIDENT. I havc no Statement to
make on the subject. I remember when I
was in the Senate of the United States I
heard distinguished Senators get up and say

[8] Jan. 7

Public Papers of the Presidents

that whenever the national debt had reached
$110 billion the country would go bankrupt
and we would all go to hell — and we didn't.
And I don't think we will now, either, under
present conditions.

[38.] Q. Mr. President, if you get those
additional 3,000 Treasury agents, would you
be able to collect that additional billion or
billion and a half in 1951, or would it take
longer?

Q. Louder!

Secretary Snyder: Will you repeat that
question, so that they can hear it?

Q. Whether you — ^if you get the addi-
tional 3,000 Treasury agents, would you be
able to collect the additional billion to a bil-
lion and a half in taxes in fiscal 195 1 ?

Q. We still can't hear. [Laughterl

Secretary Snyder: He asked the question
that if we got the additional 3,000 men in
the Internal Revenue, would we be able to
collect an additional billion dollars in fiscal
1 95 1. I will have to point out that as we
progressed beyond the war period, when we
had the excise tax situation, and a lot of
black marketing, that the enforcement peo-
ple had a luxury field in which to collect
additional revenue. We will have to put on
additional people and work harder now to
contact more people to collect less money.
It is going to be a difficult proposition to col-
lect as much undeclared revenue — ^yes —
undeclared revenue — ^now, with more people,
than it was with fewer people a year or two
ago.

We are going to — we have put on a net
of 4,100 people within the past 6 or 8 months,
and with these additional people made avail-
able to us through appropriations we are
going to put on a very strenuous campaign.
We cannot estimate exactly what the addi-
tional revenue would be with those people,
because of the changing conditions, but we
know that it will net out a great deal more
than if we did not have those people.

Q. Mr. Secretary, how much do you esti-
mate the costs on collecting each year, in
revenue?

Secretary Snyder: We have no way of esti-
mating that.

[39.] Q. Mr. President, on page M9
(p. 47), you say "we can and should make
now some of the changes which are needed
in our tax laws, and bring nearer the time
when the budget can be balanced." I be-
lieve there are also similar phrases in the
Economic Report?

THE PRESIDENT. Yes, we go iuto detail on
that in that message I am promising you.^

[40.] Q. I was going to ask you about
taxes. I was going to ask if you have a goal
when you hope the budget will be in
balance?

THE PRESIDENT. I waut it balanced as soon
as possible, and I can't set a date on it, as I
said awhile ago. Of course I am as anxious
to have it balanced as anybody in the country.

[41.] Q. Mr. President, on page M82 (p.
102) — ^that civil rights program: "In addi-
tion to the amount provided for establishing
a Fair Employment Practice Commission,
there is included f8oo,ooo as the amount
needed under proposed legislation to estab-
lish a permanent Commission on Civil
Rights." I thought they had abolished that
Fair Employment Commission?

THE PRESIDENT. It has been abolished, but I
am asking them to reinstate it. I am asking
for it to be set up again in the civil rights
legislation.

Q. It says "proposed." Has it already
been proposed? I don't remember it.

THE PRESIDENT. Yes, it has been proposed.

Q. By you?

THE PRESIDENT. Yes. I think if you will
read my message on civil rights you will find
it's in there.'^

Q. It may be so, there are a lot of things

"Item 18.

^See 1948 volume, this series, Item 20.

Harry S. Truman, igp

Jan. 7 [8]

in that message. [Laughter]

[42.] Q. Mr. President, on page M51
(p. 79)-RFC

THE PRESIDENT. M51?

Q. on the bottom of the second para-
graph, "I am recommending an additional
$500 million in. public debt authorizations
in fiscal year 1950, and $250 million in 1951."
What is that, a direct entrance into the pub-
lic debt of that borrowing — in other words,
increasing the public debt directly in the 2
fiscal years of 750 million?

Secretary Snyder: It is a method of financ-
ing those programs.

THE PRESIDENT. The Secretary of the
Treasury says that is a method of financing
those programs.

Q. What I am getting at, sir, is how do
you translate public debt authorizations?

Secretary Snyder: That would be the sale
of Government obligations to the public.

Q. In other words, a direct entrance into
the public debt?

Secretary Snyder: That's right.

[43.] Q. Mr. President, page M27 (p.
61) — in the National Defense section — ref-
erence to a reduction in new obligational
authority. Are the details of that available
inhere?

THE PRESIDENT. You wiU find thcm — set
out specifically in table 8 that has to do with
that part of the budget.

[44.] Q. Mr. President, why, in your
Military, were not the atomic energy and
stockpiling included in it as the military

THE PRESIDENT. Because I don't think they
properly should be included in that. We
have a special setup for the atomic energy
proposition, and the stockpiling is for the
general welfare of the whole Government.
Stockpiling is included, but I don't think it
is necessary that it should be.

Mr. Pace: Stockpiling is in the military.

[45.] Q. Is there a budget item, Mr.
President, to cover universal training?

THE PRESIDENT. No.

Q. Why not? You recommended it.

THE PRESIDENT. I Still rccommcud it, and
I am still for it. I have been recommending
it ever since October 1945.^

Q. How much would it cost if you got it?

THE PRESIDENT. I estimate it as $800
million.

Q. If you got it, would it increase the
deficit that much?

THE PRESIDENT. YeS.

[46.] Q. Is there an item in here any-
where — I can't find it — for going forward
with that radar net development?

Secretary Snyder: Yes. That is in the
Treasury appropriation — Coast Guard.

THE PRESIDENT. Coast Guard, under the
Treasury, so the Secretary tells me.

Mr. Pace: It is included, the radar fence,
in the Department of the Air Force. It is
included in here as well as the one men-
tioned by the Secretary of the Treasury.

Q. How much is that item?

THE PRESIDENT. I cau't auswer offhand.
The Budget will have to hunt it up.

[47.] Q. Page M44 (p. 74) — social secu-
rity — ^social welfare, health and security —
proposed legislation under the Federal Secu-
rity Agency — under promotion of public
health — ^if I remember correctly, last year
you listed a tentative figure of 800 million
for a proposed health program. I notice
that is not there this year. Do you concede
that there is no possibility of enacting that
program? ^

THE PRESIDENT. No, I don't coucede it, and
I am going to fight for it as long as I am
President. And I am going to get it, one of
these days.

Q. This year?

THE PRESIDENT. In 1 947, the Budget Di-
rector says.

®See 1945 volume, this series, Item 174.
'See 1945 volume, Item 192, and 1949 volume,
Item 85, this series.

[8] Jan. 7

Public Papers of the Presidents

Mr. Pace: If you look, you will see it.

[48.] Q. You mention the subject of
taxes in three messages

THE PRESIDENT. I beg youf pardon?

Q. You mention the subject of taxes in
three messages, but I don't recall your saying
anything about an increase in taxes. Did
you say anything about taxes being

THE PRESIDENT. I am goiug to tcll you all
about it when we get this tax message ready.
It will be ready in a few days.

Q. You say in a few days, sir?

THE PRESIDENT. Yes — ^few days. It won't
be ready Monday. That is only 2 days off.

Well, gendemen, I appreciate your interest
in this, and I want to say to you that the
Budget Bureau and the Treasury will be
available to answer any further questions
that you may have to ask. We are glad
to do it — glad to give you all the information
possible in connection with this tremendous

pile of figures. We have tried to make it as
plain and to set it out in as simple language
as possible. I think myself that it is the
best budget statement that has been gotten
out since I have been President. Thank you
very much.

Voices: Thank you.

THE PRESIDENT. Oh, the Budget Director
wants me to call your attention to page Mi 3
(p. 51), the Management Improvement Pro-
gram. I hope you will read that very care-
fully. That is the first time it has been in
the budget.

Reporter: Thank you, Mr. President.

note: President Truman's two hundred and eleventh
news conference was held in the Movie Projection
Room in the East Wing of the White House at 10: 05
a.m. on Saturday, January 7, 1950. The President
was assisted in presenting information on the budget
by John W. Snyder, Secretary of the Treasury, by
Frank Pace, Jr., Director of the Bureau of the Budget,
and by Frederick J. Lawton, Assistant Director of
the Bureau of the Budget.

Annual Budget Message to the Congress: Fiscal Year 195 1.
January 9, 1950

[ Released January 9, 1950. Dated January 3, 1950 ]

To the Congress of the United States:

I am transmitting my recommendations
for the Budget of the United States for the
fiscal year ending June 30, 195 1.

This Budget is a statement of the financial
program for the United States Government,
under both existing laws and new legisla-
tion which I am recommending to the Con-
gress. It is an expression, in financial terms,
of the actions this Government can and
should take at this time to build toward eco-
nomic growth and the expansion of human
freedom, in our own country and in the
world.

For the fiscal year 1951, Budget expendi-
tures under this financial program are esti-
mated at 42.4 billion dollars, about 860 mil-
lion dollars below estimated expenditures for

the current year. Budget receipts under
existing tax laws are estimated to be 37.3
billion dollars, a decrease of about 460 mil-
lion dollars below the present year. The
estimated Budget deficit for the fiscal year
1 95 1 is thus 5.1 billion dollars under present
tax laws, compared with an anticipated
deficit of 5.5 billion dollars in the fiscal year
1950.

I shall shordy recommend to the Congress
certain adjustments in our tax laws which
will produce some net additional revenue in
195 1, not reflected in this Budget. These
adjustments will result in a larger revenue
increase in subsequent years.

A reduction, greater than that in expendi-
tures, has been made in the requests for new
appropriations and other obligational au-

Harry S. Truman, ig^o

Budget Totals
[ Fiscal years. In millions ]

1949
actual

Receipts $38, 246

Expenditures 40, 057

Deficit —I, 811

Note. — ^Estimated receipts exclude new tax proposals.

Jan. 9 [9]

1950

estimated

$37,763

43, 297

1951

estimated

$37, 306

42, 439

-5,534

—5, 133

thority in 1951. Expenditures occur when
the Government pays its obligations, and the
Congress grants authority to incur obliga-
tions when it enacts appropriations, contract
authorizations, and authorizations to borrow
from the Treasury. The authority to incur
new obligations which I am recommending
for the fiscal year 1951 totals 40.5 billion dol-
lars, considerably below the 1950 level. This
fact is significant as an indication that the
downward trend in expenditures from 1950
to 195 1 may be expected to continue.

This financial program provides a sound
basis on which to proceed. It will properly
support the extraordinary responsibilities of
the Federal Government, both at home and
abroad, and at the same time meet our obliga-
tion to pursue a policy of financial prudence
and restraint. Such a policy must be di-
rected at producing a surplus as soon as pos-
sible under favorable economic conditions.
The reductions in expenditures, which I rec-
ommend, can be achieved and still permit
our Government to carry on its necessary
operations effectively. The moderate in-
crease in revenue, which I shall recommend
in conjunction with specific tax reforms, can
be achieved without impairing continued
economic progress.

In preparing this Budget, I have carefully
evaluated the possible alternatives in the
light of the realities of our present situation.
The soundness of a fiscal program cannot
properly be judged simply by the year-to-year
change in the expected margin between re-

Lew. -a:

ceipts and expenditures. A prudent pro-
gram must meet much broader tests, if it is
to serve the long-range interests of our
people.

The soundness of a fiscal program must
first of all be judged by whether it allows
the people, through their Government, to
meet the demands which the foreign and
domestic situations put upon them. The
necessary functions of the Government in
our complex society are varied and wide-
spread. They require large expenditures
but they are vital to our security, to the pro-
tection of our liberties, to continued social
and economic progress, and to the welfare
of our people. I have reviewed the expendi-
ture programs in the Budget, one by one,
and found them necessary to achieve these
purposes. I am confident that the Congress
w^ill come to essentially the same conclusion.

The soundness of the Government's fiscal
program must also be judged by its impact
on the economy. The Federal Budget is a
substantial part of the total flow of incomes
and expenditures in our country each year.
Federal receipts and expenditures must both
be planned to encourage the prosperity of
the economy and keep it healthy and grow-
ing. Irresponsible and short-sighted budg-
etary action could contribute to a worsening
of the world situation and to a decline in
production and employment in the United
States. Under either of these circumstances,
we would find ourselves faced by the neces-
sity of Budget oudays much larger than

[p] Jan. 9

Public Papers of the Presidents

those I am proposing, while the prospect for
increased revenues would be much less
encouraging. I am convinced that the rec-
ommendations I am making, both for ex-
penditures and for revenues, will contribute
to continued economic development.

The soundness of a fiscal program must
be judged, finally, in the light of where that
program will take us over a period of years.
This is partly a matter of necessity: most
Government programs are based on a time
schedule extending over a number of years,
and a large part of the Budget in any one
year represents binding commitments to
spend established in previous years on the
one hand, and tax liabilities already incurred
on the other. It is primarily a matter of
wisdom: sharp and arbitrary changes in Gov-
ernment programs, even where feasible, in-
volve economic loss and dislocations, and
may cause serious damage to parts of the
economy. I am confident that the fiscal
recommendations provide a solid basis for
moving toward budgetary balance in the
next few years. My confidence is based on
three main considerations.

First, it has been possible to reduce antici-
pated expenditures for the fiscal year 1951
by close to i billion dollars below the esti-
mated level for 1950, and an even greater
reduction has been made in the request for
new obligational authority. Thus, the poli-
cies followed in preparing this Budget will
permit further reductions in subsequent
years. Specifically, the largest item in the
Budget, national defense expenditures, is ex-
pected to approximate the 1951 level in the
next few years; and the costs of our foreign
aid and veterans' programs should continue
the decline already expected between 1950
and 1 95 1. It should also be possible in
future years to reduce the cost of programs
which have helped to meet the postwar
transition problems of specific major areas
of our economy, notably the support of agri-

cultural prices and the creation of an ade-
quate secondary market for housing mort-
gages. Finally, if the Congress enacts the
proposed increase in postal rates, the burden
of the postal deficit on recent Budgets will
be largely eliminated.

The programs mentioned above constitute
the bulk of the Federal Budget. With re-
spect to other programs, relating primarily
to domestic activities. Federal responsibilities
will increase as the Nation grows. But the
additional budgetary requirements for these
programs, under a prudent fiscal policy,
should be substantially less than the decline
to be expected in the extraordinary postwar
programs. In this connection it should be
emphasized that the urgently needed insur-
ance measures which are recommended in
the fields of unemployment compensation,
old-age security, and medical care will be
primarily financed by special taxes designed
to defray their costs.

Thus, assuming continued favorable eco-
nomic and international developments, it is
possible to plan on further reductions in total
expenditures after 195 1.

The second major consideration support-
ing my confidence in this fiscal program is
the fact that our economy is a dynamic and
growing one. Each year our population and
the productivity of our labor force rise, and
our total national output must rise also if
we are to fulfill our obligation to maintain
high employment. As our economy grows,
tax revenues will grow also. The effects of
this growth are not fully reflected in the
receipts estimates for 195 1, because the tem-
porary decline in incomes during this past
year will affect some tax yields in 1951.

Federal expenditures are themselves of
fundamental importance to our prospects for
steady economic growth. Programs for such
purposes as national defense and interna-
tional recovery are essential to maintain a
favorable international situation. In addi-

Harry S. Truman, ig^o

Jan. 9 [9]

tion, many Federal expenditures constitute
direct supports for important sectors of our
economy, or direct investments in assets such
as power facilities or in better education and
other services, which add to the productive
capacity of the Nation. Thus this Budget
is not only consistent with an expanding
economy, but will make a substantial con-
tribution to that objective.

In analyzing the economic impact of Fed-
eral financial operations on our economy,
increasing attention is also being paid to the
aggregate of Federal cash transactions with
the public, which are not fully reflected in
the totals of Budget expenditures and re-
ceipts. Primarily important is the fact that,
as long as the social insurance trust funds
are building reserves to cover liabilities in
future years, they show a substantial excess
of receipts over payments. Therefore, the
current economic impact of Federal financial
activities, as reflected in the net difference
between all cash receipts from and all cash
payments to the public, is usually different
from that indicated by the Budget surplus
or deficit. In 195 1, for example, the excess
of cash payments over receipts is estimated
at 2.7 billion dollars, 2.4 billion dollars less
than the estimated Budget deficit. Continu-
ing improvement in our fiscal position,
which our present plans should achieve, will
therefore probably result in an excess of total
cash income over cash outgo before the
Budget will show a surplus. This aspect of
our over-all fiscal position is important in
supporting the basic economic soundness of
the fiscal program, although it does not
lessen the need for the greatest possible pru-
dence in the conduct of our financial opera-
tions as reflected in the Budget, which is the
proper instrument of Executive and Legis-
lative control.

The third major consideration supporting
the soundness of this fiscal program is the
fact that the tax recommendations which I

shall transmit to the Congress will both im-
prove our tax structure and place us in a
better position to meet our continuing fiscal
requirements. It is highly important that
we begin to make the basic changes in the
tax system which are needed to make it
more equitable and to provide better incen-
tives for producing the amounts and types of
investment, consumption, and savings which
will contribute to an expanding economy.
The large and badly devised tax reduction of
1948 sharply limits the extent to which we
can make changes at the present time. Nev-
ertheless, we can and should make now some
of the changes which are needed in our tax
laws, and bring nearer the time when the
Budget can be balanced. Because of the
time lag in tax collections after changes in
the law, and the fact that some of the changes
will result in an immediate loss in revenue,
the tax recommendations which I shall sub-
mit to the Congress will produce less addi-
tional revenue in 1951 than in subsequent
years, when the changes will be fully
effective.

For all these reasons, the financial program
which I am recommending represents a
sound, long-range basis on which to plan our
governmental operations at this time. It is
directed at achieving a budgetary balance
in the only way in which it can be achieved —
by measures which support rather than im-
pair the continued growth of our country.
It is based on expenditure plans which can
be sustained in the years following 1951
without embarrassment to our fiscal position.
Its accomplishment does, however, depend
upon our continued self-control in holding
expenditure programs to no more than nec-
essary levels.

As in all recent years, the Budget for 1951
is dominated by financial requirements to
pay the costs of past wars and to achieve a
peaceful world. Estimated expenditures for
these purposes are 30 billion dollars, or about

[9] Jan. 9

Public Papers of the Presidents

71 percent of the total Budget. This is a
reduction of 1.8 billion dollars from esti-
mated expenditures for the same purposes in
1950. National defense and international
programs, designed to insure our security
and to create the economic and political con-
ditions necessary for world peace, will re-
quire about 18 billion dollars. Veterans*
programs and interest on the public debt,
commitments arising mainly from the last
war, will require about 12 billion dollars.

Our unprecedentedly large expenditures
in recent years for international programs
have been undertaken to assist free peoples
to recover from the devastation of the war
and to restore their capacity for future
growth both in material things and in the
practice of democratic principles. These
programs are proving to be an investment
paying dividends, far beyond their cost, in
enhancing our own security and in providing
a basis for world peace and prosperity. The
job is not yet done, the goals are not yet
reached; but the progress so far achieved
makes possible in 1951 a substantial reduc-
tion in the dollar costs of these programs.
Total expenditures for international affairs
and finance are estimated at 4.7 billion dol-
lars, a reduction of 1.3 billion dollars from
1950. This amount reflects the minimum
requirements for these programs, and their
success to date emphasizes the compelling
need to carry them through on the planned
basis.

As progress is made toward achieving the
short-range objectives of recovery and relief,
two other international activities assume in-
creasing importance. First, I am renewing
the recommendation for a program of tech-
nical and capital assistance to underdevel-
oped countries. The Budget expenditures
in 195 1 will be relatively small but they rep-
resent a step of great significance in the
encouragement of world economic expansion
and the growth of world trade, which are

essential to our national prosperity. Second,
I am recommending additional funds in
1 95 1 for the mutual defense assistance pro-
gram, authorized by the Congress last year,
and now getting under way. This program
is a necessary supplement to economic
growth as a bulwark against aggression, and
is an integral part of the cooperative effort
to assure the continued independence of free
nations.

Expenditures for national defense must be
sufficient to provide us with the balanced
military strength we must maintain in the
present world situation, at a level which can
be sustained over a period of years. In
195 1, expenditures for national defense are
estimated at 13.5 billion dollars, an increase
of about 400 million dollars over 1950. The
present level of expenditures is substantially
less than was anticipated a year ago, and is
the result of careful Budget planning and
vigorous administrative action.

Expenditures for veterans' services and
benefits are estimated at 6.1 billion dollars
in 195 1, a decline of 825 million dollars from
1950. Our veterans' programs represent
commitments which the Government has
made to those who have served in its
armed forces, and these commitments must
be met. While that part which represents
pensions, medical care, and similar services
will continue to rise gradually, the program
of readjustment benefits was intended to be
transitional, and we should plan on a con-
tinued reduction in its cost during the next
few years.

Interest on the public debt is estimated at
5.6 billion dollars in 195 1, slightly lower
than in 1950. This is, of course, a fixed
commitment of the Government, and repre-
sents predominantly the cost of financing the
last war.

All expenditures, other than those for in-
ternational, national defense, and veterans'
programs, and interest on the debt, total

Harry S. Truman, ig^o

Jan. 9 [9]

12.5 billion dollars, about 29 percent of the
total Budget. This is an increase of about
I billion dollars from estimated expenditures
for these purposes in 1950. They include
many important activities such as the Atomic
Energy Commission and the Maritime Com-
mission, which are closely related to our
national security. Furthermore, they repre-
sent those positive functions which Govern-
ment must fulfill if we are to have a healthy
and growing economy. Federal expendi-
tures for these purposes in 195 1 are expected
to constitute a substantially lower percentage
of the total national income than the corre-
sponding percentage in 1939.

The 12.5 billion dollars which this Budget
provides for these domestic programs,
viewed item by item, reflects — and has been
generally recognized by the Congress to re-
flect — the necessary contributions of the Fed-
eral Government in our modern economy.
The major question in my mind is not
whether we are doing too much, but whether
the budgetary requirements of the major
national security and war-connected pro-
grams have constrained us to undertake too
little toward supporting and stimulating the
realization of our country's great potential
development. It must be recognized that
failure to support essential Federal activities
would impede the continued expansion upon
which the well-being of our economy and the
soundness of the Government's fiscal posi-
tion alike depend.

Expenditures in this Budget, designed to
assist economic development in the categories
of housing and community development,
agriculture, natural resources, transportation
and communication, finance, commerce, and
industry, and labor, together amount to 7.9
billion dollars, 19 percent of total estimated
expenditures.

We must push ahead, for example, with
atomic energy development, and the Budget

provides 817 million dollars for this purpose.
We must maintain and develop adequate
aviation facilities and services, for which 230
million dollars is included. The Federal
Government should continue to assist States
in developing an adequate national highway
system; Federal expenditures for this pur-
pose are estimated at 507 million dollars in
1 95 1. The development of our rivers for
flood control, navigation, reclamation,
power, and other uses is of fundamental
importance for economic growth, and is
largely a Federal responsibility, for which
this Budget includes 1.4 billion dollars. The
Government is substantially aiding private
industry and local communities in producing
more and better housing at prices people
can afford; 1.3 billion dollars is included for
these purposes. Over 800 million dollars is
provided to further the conservation of farm
lands and to make loans for extending elec-
tricity to farms.

There is one aspect of these expenditures
which has properly received widespread at-
tention by the Congress and the public as
having an important bearing on the long-run
fiscal position of the Government. Many
expenditures represent the acquisition of as-
sets which are recoverable or will give con-
tinuing returns in future years, and which
in normal business accounting would not
usually be considered as current expense. It
is estimated that in the 1951 Budget such
expenditures, excluding military public
works and equipment, amount to about 5.6
billion dollars, of which about 4 billion dol-
lars is anticipated to be in the recoverable
category. In the case of the Federal Govern-
ment, in contrast to private business, these
investment expenditures cannot properly be
financed differendy from other items in the
Budget. But their size and nature are im-
portant in evaluating the strength of our
fiscal position. A special analysis of the

[9] Jan. 9

Public Papers of the Presidents

nature and extent of investment expendi-
tures is included in part III of the Budget
this year for the first time.

Economic growth must be matched by
comparable development in the social w^ell-
being and living standards of all our people.
Continued progress depends in large part
upon the increasing fulfillment of the respon-
sibilities of Government in such fields as
social welfare, education, and public health.
In addition to the transfer of 594 million dol-
lars of pay-roll taxes to the railroad retire-
ment trust fund, the Budget proposes total
funds of 2.1 billion dollars for social welfare,
health, and security, and 434 million dollars
for education and general research, about
one-sixteenth of total Federal expenditures.
These, too, are investments in the future of
our country. Over 80 percent of these funds
is for grants to States and localities.

The remaining programs, classified under
general government, are estimated to cost 1.3
billion dollars. These funds provide for
over-all legislative, judicial, and executive
operations of the Government, and for vari-
ous central services such as the maintenance
of public buildings. Included in this total
are 424 million dollars for tax collection and
other financial operations, and 333 million
dollars for the Government's payment to the
civil service retirement fund.

The detailed activities of Government
agencies in all fields have been closely re-
viewed to eliminate all but the minimum
operations required. This has made neces-
sary the denial of request after request for
additional funds which — ^taken by them-
selves and in the judgment of particular
groups affected — are highly meritorious.
The progress made in this Budget in revers-
ing the trend toward higher expenditures
and in achieving a substantial reduction has
been made possible only by the most vigorous

application, in every area, of a policy of hold-
ing the numerous activities to essential levels.

In a very few cases — ^mainly middle-in-
come housing — ^the exigencies of particular
situations justify the recommendation of lim-
ited new domestic programs. In addition,
I am renewing proposals previously made
for aid to education and expanded public
assistance, primarily in the form of grants
to States, and for the enactment of certain
social insurance legislation which would be
financed primarily by special taxes. Beyond
this, however, I am recommending no new
programs which would require large expend-
itures in future years, above the amounts
included in this Budget. In the case of ex-
isting programs, while vigorous effort is be-
ing devoted to improving their efficiency,
they must in the public interest be given
sufficient funds to allow effective operation.

The rise from 2.5 billion dollars in 1950
to 3.1 billion dollars in 1951 in estimated
civil public works expenditures, including
grants and loans, reflects almost entirely the
minimum requirements of projects and pro-
grams now under way. With respect to Fed-
eral public works in such fields as reclama-
tion, flood control, and rivers and harbors,
this Budget does not provide for starting any
new projects, despite the pressures that exist
for initiating construction of a large number
of additional projects which are already au-
thorized. Federal grants to States for public
works have also been generally limited to the
necessary costs required to carry forward
continuing construction programs, primarily
those for highways, airports, and hospitals.

Our policies with respect to expenditures
must of course remain flexible to meet shifts
in international or economic conditions.
The policies I have outlined represent the
sound and necessary basis for Budget pro-
grams in the light of the oudook at this time.

Harry S. Truman, 7950

Jan. 9 [9]

MANAGEMENT IMPROVEMENT
PROGRAM

The past year has been one of outstand-
ing achievement in improving the organiza-
tion and operating methods of the executive
branch. This is an important fact to note
in the Budget Message as the accomplish-
ment of better management in Government
is essential to the fulfillment of our estab-
lished fiscal goals. It is also a responsibility
to which every official must give increased
attention if the public is to receive a full
return on its tax dollar. Action has been
taken on many fronts. To cite but a few:
the Department of State has been reorga-
nized; improved operating methods have
been installed in the Treasury Department;
further progress toward unification has been
made with the creation of a Department of
Defense; central service functions of the
Government have been reorganized in the
General Services Administration; significant
reorganizations have occurred in the Post
Office Department, the Department of Com-
merce, and the Civil Service Commission.

In cooperation with the Congress, I intend
to continue a vigorous program to achieve
further improvements in governmental
management.

One phase of this program requires the
enactment of legislation and the approval of
reorganization plans. During the coming
year I recommend that the Congress enact
basic personnel legislation to make possible
further improvements in the way the Gov-
ernment recruits, trains, and supervises its
employees. I also recommend that the Con-
gress take action to allow the Post Office to
maintain its own accounts and conduct its
financial affairs on a businesslike basis and
to permit appointment of postmasters by the
Postmaster General.

During the session I shall transmit to the
Congress a number of reorganization plans.
The objective of these plans will be the es-
tablishment of clear lines of responsibility
and authority for the management of Gov-
ernment activities and the more effective
grouping of Government programs within
departments and agencies.

A second phase of the management im-
provement program includes Government-
wide activities in which all agencies partici-
pate. Major undertakings in this area are
the installation of more efficient property and
records management practices under the
leadership of the General Services Adminis-
tration; strengthening of personnel manage-
ment activities under the leadership of the
Civil Service Commission; and institution,
under the sponsorship of the Bureau of the
Budget, of systematic review by all agencies
of operating effectiveness and economy as
required by the Classification Act of 1949.
In addition, more modern accounting prac-
tices are being installed throughout the Gov-
ernment under the guidance of a joint com-
mittee consisting of the Secretary of the
Treasury, the Comptroller General and the
Director of the Budget.

In the field of programing and budgeting,
the progress made toward presentation of
this 195 1 Budget on a "performance" basis
is an example of results stemming from the
improvement program. An examination of
the body of this document will indicate a
substantial change from that of previous
years. The activities for which funds are
recommended are described so that the Con-
gress and the citizens may see more clearly
the relationship between the activities to be
performed and the costs of those activities.
Future Budget documents will include addi-
tional improvements. Some of these will
reflect current efforts both to strengthen and

[p] Jan. 9

Public Papers of the Presidents

simplify Government accounting and to de-
velop better measures of work performance.
Others will provide additional kinds of anal-
yses to enable examination and understand-
ing of the Budget from different standpoints.

The third aspect of the management im-
provement program is the work being done
by individual departments and agencies. I
have instructed each department and agency
head to inaugurate an aggressive program
of management improvement in his depart-
ment. These departmental programs have
been reviewed in terms of their relation to
financial requirements and their contribution
to the solution of known problems. I will
announce shortly certain areas to which
priority will be given in the management
improvement work of the executive branch
during the year 1950. The special fund for
management improvement which was au-
thorized by the Congress last year will be
utilized to carry out some of the specific
projects. In following through to secure
results from this entire program I will have
the assistance and advice of my Advisory
Committee on Management Improvement.

Under our Federal form of government,
many public services are the common con-
cern of Federal, State, and local government.
Continuing attention needs to be given by
all levels of government to the problems
arising from the interrelations of our tax
systems and the administration of common
governmental functions. Federal and State
and local officials are currendy studying the
possibilities of further cooperative arrange-
ments in tax administration in order to re-
duce costs and improve coordination. We
are also cooperating in developing legislative
proposals to deal with several current prob-
lems of mutual concern: provision of certain
local services to Federal personnel, applica-
tion of local taxes to personnel and transac-
tions on Federal reservations, and the
establishment of a general system of pay-

ments to State and local governments whose
property-tax base has been reduced by Fed-
eral acquisitions of real estate.

The reports of the Commission on Orga-
nization of the Executive Branch of the
Government have provided the framework
for much of the improved organization and
management which has been achieved and
which I hope to achieve during the coming
year. While work has been started in a
number of the areas containing the greatest
potential for economy and improved opera-
tions, many further legislative and adminis-
trative actions are needed. It should be
realized that the greater effectiveness and
economy and better service to the public,
which come from improved management,
are the cumulative result of a great many
individual actions. Realization of those
goals requires the coordinated and unrelent-
ing efforts of all Federal officials and em-
ployees. We must continue to emphasize
the achievement of better management as
an important part of the job of public service
in which the Congress and the executive
branch are engaged.

BUDGET RECEIPTS

Budget receipts in the fiscal year 1951 are
estimated at 37.3 billion dollars under exist-
ing tax legislation, 457 million dollars below
the estimate for the current year. Decreased
collections from corporation income taxes
account for the principal decline in receipts
between the 2 years, reflecting the fact that
the reduction in corporate profits from the
calendar year 1948 peak does not have its
full effect on tax receipts until the fiscal year
195 1. The estimates of receipts assume eco-
nomic activity at approximately the same
level as at the present time.

I will shortly transmit to the Congress my
recommendations for changes in our tax laws
to provide a more balanced and equitable

Harry S. Truman, ig^o

Jan. 9 [9]

Budget Receipts
[ Fiscal years. In millions ]

1949
actual

Source
Direct taxes on individuals:

Individual income taxes $17, 929

Estate and gift taxes 797

Direct taxes on corporations:

Corporation income taxes 11, 343

Excess profits taxes 211

Excises 7> 551

Employment taxes:
Existing legislation:

Federal Insurance Contributions Act i» 690

Federal Unemployment Tax Act 223

Railroad Retirement Tax Act 564

Railroad Unemployment Insurance Act 10

Proposed legislation:

Medical care insurance

Improvement of old-age and survivors insurance

Customs 384

Miscellaneous receipts:

Existing legislation 2,072

Proposed legislation

Deduct:

Appropriation to trust funds:

Existing legislation ~"ii ^9°

Proposed legislation:

Medical care insurance

Improvement of old-age and survivors insurance

Refunds of receipts — 2, 838

1950
estimated

%i7> 971
697

11,075

100

7,631

2,245

223

570

375

I, 28

—2, 245

— 2, 177

I95I

estimated

$18,246
692

10,458

7,642

2,515

224

594
10

250
1,200

375

1,096
60

—2, 515

—250
— 1,200
—2, 151

Budget receipts 38, 246 37, 7^3 37, 3o6

Note. — ^Estimated receipts for 1951 exclude new tax proposals, except for recommended changes in em-
ployment taxes and miscellaneous receipts.

tax structure and to increase Federal reve-
nues. The net increase in revenues during
1 95 1 will be substantially smaller than in
subsequent years, owing to the time required
for some of the changes to become fully
effective.

Direct taxes on individuals, — Receipts
from the income tax on individuals exceed
those from any other tax. The total of 18.9
billion dollars estimated for 1951 for direct
taxes on individuals is practically unchanged
from the 1950 total, and reflects continued
high levels of employment and income.

Direct taxes on corporations, — ^The fiscal
year 1951 estimate of receipts from taxes on
corporations is 10.5 billion dollars. During
the fiscal year 1951 corporations will pay

income tax on the profits earned during the
calendar years 1949 and 1950. The decline
in profits from the peak level of 1948 will
therefore adversely affect these receipts for
the fiscal year 1951.

Excises and customs, — ^Under present laws
very litde change is anticipated in collections
of excise taxes and customs.

Employment taxes.— Tht, tax rate for old-
age and survivors insurance was increased
from I to 1 54 percent on the first of this
month; hence the receipts estimate for
1950 includes taxes based upon both the old
rate and the new. Receipts for 195 1 under
existing legislation represent a full year's
collection at the new higher rate.

I have recommended expansion and im-

[9] Jan. 9

Public Papers of the Presidents

provement of the old-age and survivors in-
surance system and a nev^ program of
medical care insurance. It is estimated that
the additional taxes to be collected for these
programs will amount to 1.4 billion dollars
in 1 95 1. Since these sums w^ill be trans-
ferred immediately to trust accounts, Budget
receipts will not be increased.

Miscellaneous receipts, — Miscellaneous re-
ceipts have been declining steadily since
1947, primarily because of the drop in sales
of surplus property originally acquired for
war purposes. During 195 1 receipts from
surplus property will be only about o.i bil-
lion dollars compared to the peak of 2.9
billion dollars in 1947.

There are other decreases in the estimates
of miscellaneous receipts which are in the
nature of changes in reporting. Certain
receipts, notably of the Farmers* Home Ad-
ministration and of the public housing pro-
gram, were formerly deposited into miscel-
laneous receipts, but are now deducted from
the expenditures of the programs involved.
These changes, of course, have no effect on
the surplus or deficit.

The estimate of miscellaneous receipts for
195 1 reflects my recommendation that legis-
lation be enacted to permit the acceleration
of capital repayment by the Federal home
loan banks. An increase in patent fees is
also necessary to make the Patent Office more
nearly self-supporting.

Refunds of receipts, — Refunds for 195 1 are
estimated at about the same level as for the
current year, 0.7 billion dollars less than in
1949. The decline is the result of the fact
that 1949 refunds were unusually high be-
cause of the retroactive features of the Reve-
nue Act of 1948.

PUBLIC DEBT

The public debt amounted to 252.8 billion
dollars on June 30, 1949. Estimated Budget

deficits of 5.5 billion dollars in the fiscal year
1950 and 5.1 billion dollars in the fiscal year
195 1, together with certain minor adjust-
ments, will cause the debt to increase to 263.8
billion dollars by the end of 195 1. In 195 1,
about 2.5 billion dollars of the increase in
the debt will be financed by new investments
in Federal securities by trust accounts and
other Government agencies.

BUDGET EXPENDITURES AND
AUTHORIZATIONS

A summary of Budget expenditures ac-
cording to the broad programs or functions
for which the money is spent is set forth in
the table below. This table includes all ex-
penditures from the general and special
funds of the Treasury and the net expendi-
tures of wholly owned Government corpora-
tions. Expenditures from the trust funds
are excluded.

All expenditures flow from obligational
authority enacted by the Congress. The net
new appropriations and other authorizations
recommended for the fiscal year 1951 total
40.5 billion dollars. Of this total, 33.1 billion
dollars is now formally recommended for
action by the Congress, while 7.4 billion dol-
lars is tentatively estimated for later submis-
sion. In addition, this Budget includes ap-
propriations of 4.5 billion dollars to liquidate
obligations incurred under prior year con-
tract authorizations, more than half in pro-
grams for the national defense.

Since contracts with industry must be let
well ahead of deliveries, a considerable lead
time is required for the economical operation
of many Government programs. This is
especially true for public works and military
procurement. Financial obligations incurred
in prior years, therefore, will have already
fixed a substantial part of the estimated
Budget expenditures for 1951. Of the total
Budget expenditures of 42.4 billion dollars

Harry S. Truman, ig$o

Jan. 9 [9]

Budget Expenditures and Authorizations by Major Function
[ Fiscal years. In millions ]

1949

Function actual

International affairs and finance $6, 462

National defense 11, 914

Veterans' services and benefits 6, 669

Social welfare, health, and security i, 907

Housing and community development 282

Education and general research 70

Agriculture and agricultural resources 2, 512

Natural resources i» 512

Transportation and communication i, 622

Finance, commerce, and industry 120

Labor 193

General government i, 170

Interest on the public debt 5, 352

Reserve for contingencies

Adjustment to daily Treasury statement 272

Expenditures

1950
estimated

$5, 964

13.148

6,905

2,297

I, 006

125

2,671

1,845

1,894

225

219

1,223

5,725
50

1951
estimated

$4,7"

13,545
6, 080
2,714
1,329

434
2, 206
2,218
1,682

212

243
I, 267
5,625

175

"New obligational
authority for igsi

Appropria-
tions

$4, 505

'11,359

5,847

2, 625

117

875

1,594

973

266

1,231

5,625

200

Other

$530

1,441

165

704

7
580

370
673
250

Total 49, 057 43, 297 42, 439 '^35, 73i 4, 723

^In addition 851 million dollars of reserved 1950 contract authorizations and 22 million dollars of 1950

appropriations will be available for 1951 programs.

^This Budget also includes 4,514 million dollars of appropriations to liquidate prior year contract

authorizations.

estimated for 1951, about 12.1 billion dollars,
29 percent, will be payments for obligations
incurred in 1950 or in earlier years; the re-
mainder will be for 195 1 obligations.

Net new appropriations recommended for
1 95 1 are 1.6 billion dollars less than those
estimated for 1950. They represent total
appropriations (including permanent appro-
priations) less those to be used to liquidate
prior year contract authorizations. New con-
tract authorizations (which will require later
appropriations to liquidate) totaling 3.4 bil-
lion dollars are also included in this Budget,
also about 1.6 billion dollars less than the
estimated new contract authority for 1950.
Special authorizations to use the proceeds of
Treasury borrowing in the financing of cer-
tain Government programs are included in
the 1 95 1 recommendations to the amount
of 1.4 billion dollars. This represents a de-

cline of 6 billion dollars from the 1950 esti-
mate for this type of authorization. The esti-
mate for 1950, however, anticipates action by
the Congress in providing supplemental pub-
lic debt authorizations of 2 billion dollars for
the Commodity Credit Corporation, one-half
billion dollars for the Reconstruction Finance
Corporation, and stand-by borrowing author-
ity of 1.7 billion dollars for the Federal Sav-
ings and Loan Insurance Corporation and
the Federal home loan banks.

PROGRAMS

The following sections describe the pro-
grams undertaken in each of the major func-
tions of the Government and the new
proposals I am making in this Budget. In
addition, this year for the first time the
Budget contains (in part II) improved pres-

[9] Jan. 9

Public Papers of the Presidents

entations showing in detail the programs and
performance of all Government agencies.

International Affairs and Finance

In 1 95 1, as in every year since the war,
the cost of our international programs will be
large because far-reaching problems remain
to be solved. Notable progress has been
made toward foreign economic recovery, but
some of the most difficult steps lie ahead.
The threat of aggression still exists, requir-
ing continued efforts to bolster the defenses
of free nations. The economic underdevel-
opment of great areas of the world deprives
their peoples of the adequate living stand-
ards in which free institutions can flourish,
and deprives other peoples of needed re-
sources which expanded world trade could
bring.

The 1 95 1 Budget provides for 4.7 billion
dollars of expenditures on our international
activities. This is 1.3 billion dollars, or
more than 20 percent, below estimated ex-
penditures in 1950. This very substantial
reduction reflects the declining costs of our
recovery and relief programs as they have
stimulated and supported economic recon-
struction, rising living standards, and grow-
ing political stability. My recommendations
for 1 95 1 represent the minimum amount
required to carry our plans forward toward
a successful conclusion. The continuing
and grave uncertainties which remain in the
world situation make it imperative that we
be prepared to adjust our efforts to accord
with developments. If, however, we make
at this time the investment necessary to
achieve continued economic recovery, I ex-
pect the trend in total expenditures for our
international activities to continue down-
ward in subsequent years.

Recovery and relief costs, which in 1951
will be over 75 percent of international ex-
penditures, will diminish rapidly as recovery

programs near completion, although new
measures may become necessary to attain
specific objectives in particular areas. At
the same time, our programs for stimulating
foreign economic development assume in-
creasing importance, and expenditures for
this purpose should increase somewhat in
future years as political conditions stabilize
and opportunities for mutually advantageous
technological improvement and productive
investment abroad increase. Furthermore,
expenditures for foreign military assistance
will remain substantial for several years as
shipments are made under the programs au-
thorized in 1950 and proposed for 1951.

Conduct of foreign affairs, — Expenditures
in 195 1 for the State Department, through
which we conduct our foreign affairs, will
be about the same as for the current year.
The decline of war claims payments will be
about offset by increased requirements in
other programs, notably the Department's
recent assumption of responsibilities in Ger-
many. The international information and
education program will continue at the ex-
panded level to be reached this year.

Our Government also participates in many
international agencies, principally the United
Nations and its affiliates. Through such
participation we are actively engaged in a
cooperative and world-wide effort to build
the foundations for continued peace and the
social and economic betterment of all peo-
ples. One important aspect of this effort
has been the development of a set of prin-
ciples and a mechanism, through the pro-
posed International Trade Organization, for
facilitating the growth of world trade on a
multilateral basis. I again urge that the
Congress approve the charter of the Inter-
national Trade Organization and pass the
necessary implementing legislation.

European recovery program. — A major
problem of foreign policy today is the fact
that certain key areas of the world, prin-

Harry S. Truman, ig^o

International Affairs and Finance
[ Fiscal years. In millions ]

Jan. 9 [9]

Expenditures

1949 {950 ipi

actual estimated estimated

$134 '$187 '$190

38 58 49

"New obligational
authority for ig^i
Appropria-
tions Other

$175

4,040
i»349

—41

288

—57
12

289
125
197

^ 4, 062
831

^93

-38

71
II

160

195

3»250
279

^iii

-38

20
3

48
8

645

3, 100
320

115

25
4

Program or agency
Conduct of foreign affairs:

State Department

Participation in international organizations (pres-
ent programs and proposed legislation)

Other

International recovery and relief:
European recovery program and other foreign aid
(present programs and proposed legislation) . . .

Aid to occupied areas

Aid to Korea (present programs and proposed

legislation)

Reconstruction Finance Corporation (loan repay-
ment)

Aid to refugees:

International Refugee Organization

Displaced persons program (present programs

and proposed legislation)

Palestine refugees (present programs and pro-
posed legislation)

Other

Foreign economic development:

Export-Import Bank loans

Inter- American development

Technical assistance to underdeveloped areas (pro-
posed legislation)

Foreign military assistance:
Mutual defense assistance program (present pro-
grams and proposed legislation)

Greek-Turkish aid (acts of 1947 and 1948)

Assistance to China (act of 1948)

Philippine aid

Total 6, 462 5. 964 4» 711 ^ 4> 505 530

^ Includes transfer from funds for aid to occupied areas.
^ Less than one-half million dollars.

®This Budget also includes 518 million dollars of appropriations to liquidate prior year contract author-
izations.

7
35

648
45

$3o

500

cipally western Europe, are faced with the
necessity of making fundamental and com-
plex adjustments to the far-reaching changes
in their trade and financial relationships
which resulted from the war. The great
achievement of the European recovery pro-
gram to date has been to help these countries
to recover from the devastation of war, to

restore living standards, and to maintain
political stability, and thus to place them in
a position to make the adjustments that are
required.

As a consequence of their situation, these
countries have experienced an extraordinary
need in recent years for commodities and
equipment which could, for the most part.

41-355-^65-

[g] Jan. 9

Public Papers of the Presidents

be supplied only by this country, but for
which they were not able to pay by the
export of goods and services. If we had
permitted their imports to sink to the tem-
porarily reduced level which they could
finance, it would have drastically reduced
their living standards and invited unrest and
destructive economic nationalism. Instead,
we have undertaken a planned and mutual
effort designed to achieve, during a relatively
short period of United States assistance, ex-
panded foreign production and trade, an
increase in exports yielding dollars and a
lessening need for imports requiring dollars,
and an increased international flow of in-
vestment capital, thus establishing the basis
for economic growth and prosperity.

The European recovery program has made
notable progress toward these objectives since
its inception almost 2 years ago. As a result,
1 95 1 appropriation requirements for all seg-
ments of the program, including that portion
of our aid to western Germany which has
previously been provided separately from
funds for aid to occupied areas, will be more
than I billion dollars below the amounts
provided by the Congress for the same pur-
poses in 1950. Serious obstacles, however,
remain to be surmounted. A substantial
expansion in international trade and invest-
ment is necessary if the remaining adjust-
ments are to be completed without involving
serious economic and political dislocation.

The past year has shown that this task
will not be easy. To achieve an increased
flow of trade and investment will require
far-sighted and vigorous steps by the Euro-
pean countries, and by other nations as well,
including our own, if international economic
relationships are to be established on a sound
basis. The funds included in this Budget
for continuing our participation in the Euro-
pean recovery program are an essential ele-
ment for further progress.

Other international recovery and relief

programs, — Our economic aid to occupied
areas similarly takes the form of recovery
programs designed to balance their trade at
levels adequate to maintain stability without
continued United States assistance. During
the current fiscal year, responsibility for eco-
nomic aid to western Germany has been
transferred from the Department of the
Army to the Economic Cooperation Admin-
istration, and these costs will be met in 1951
from European recovery program funds.
Army-administered aid to occupied areas in
1 95 1 will therefore be limited almost wholly
to Japan and the Ryukyu Islands. The sub-
stantial sums invested in Japanese recovery
since the end of the war are yielding results
which permit a reduction in 1951 outlays
for this purpose, and bring us nearer to
termination of this program.

Although I have urged the Congress to
authorize a similar recovery program for the
Republic of Korea, funds provided to date
permit operation at only a relief level. Early
enactment of the legislation now pending
will permit recovery to proceed and hasten
the date when our aid can be concluded.
The estimates in this Budget anticipate a
start toward recovery in the remainder of the
current fiscal year and substantial further
progress in 1951.

Our remaining international requirements
for purposes of relief, as contrasted with re-
covery, are chiefly those for assistance to ref-
ugees. The work of the International
Refugee Organization will extend through
195 1 ; its remaining work load, however, is
substantially reduced, allowing a 65 percent
reduction in our contribution below the 1950
level. The estimate for the Displaced Per-
sons Commission reflects my recommenda-
tion that the present Displaced Persons Act
be speedily amended to make it fair and
workable. The provision for aid to Pales-
tine refugees is the present estimate of our
share of the cost of the proposed United

Harry S. Truman, ig^o

Jan. 9 [9]

Nations' program for restoring to productive
activity the several hundred thousand per-
sons displaced during the recent conflict in
Palestine.

Foreign economic development, — Since
the end of the w^ar, the urgent, though tem-
porary, requirements for international re-
covery and relief have of necessity taken
priority over longer-range efforts to promote
w^orld economic development. The devasta-
tion left by w^ar had to be overcome. The
restoration of economic strength to the
world's principal industrial areas necessarily
had to precede any real economic progress in
the less-developed parts of the w^orld.

Now that recovery is well under way, we
must increasingly turn our attention to meas-
ures for the gradual and permanent expan-
sion of world production, trade, and living
standards which are necessary for enduring
world peace. Great potentialities for such
expansion lie in the underdeveloped areas of
the world, with resulting benefits to the peo-
ples of these areas and to other countries,
including our own.

I again urge the Congress to authorize a
program of technical assistance to enable the
peoples of these areas to learn, and to adapt
to their own needs, modern technological
and scientific knowledge in such fields as
agriculture, health, education, transportation,
and industry. The achievements of our
present technical assistance activities in the
American Republics and in Europe attest to
the success and practicability of this ap-
proach. This Budget provides for expendi-
tures of 25 million dollars for the new pro-
gram. This includes the United States share
in the cost of the program for technical as-
sistance recently approved by the United
Nations.

A second basic requirement for economic
progress in underdeveloped areas is a sub-
stantial increase in the inflow of capital for
productive investment. These areas should

offer opportunities for private capital and pri-
vate enterprise, if there is assurance of fair
and equitable treatment for foreign capital
such as is contained in the commercial trea-
ties which are now being negotiated with
many nations. Nevertheless, there will re-
main certain abnormal risks which deter
potential investors, and I again urge the en-
actment of legislation authorizing an experi-
mental program by the Export-Import Bank
to guarantee private developmental invest-
ments against such risks.

In many cases the flow of private capital
may not be available or adequate, or particu-
lar circumstances may make governmental
action preferable. In such cases, the invest-
ment of public funds may be needed,
through such institutions as the International
Bank for Reconstruction and Development
and the Export-Import Bank. These insti-
tutions are currendy directing their emphasis
to loans for developmental purposes.

Foreign military assistance, — Although
economic recovery is the most essential con-
dition to the maintenance of freedom and
stability in western Europe and other regions
of vital importance to our own security, eco-
nomic vitality alone will not suffice to prevent
aggression. Stronger military defenses are
required, but these nations cannot unaided
strengthen their defenses to a point sufl&cient
to deter aggression without seriously retard-
ing their recovery efforts. To solve their
dilemma and to strengthen our own defenses,
we agreed last year to unite with our neigh-
bors of the North Adantic community in
developing and putting into effect an inte-
grated defense plan for that area.

We have implemented that decision
through the Mutual Defense Assistance Act
of 1949, which provides for the supply of
arms to the Treaty nations to supplement
their own defense measures. The act also
continues our previous program of assistance
to Greece and Turkey, which has already

[p] Jan. 9

Public Papers of the Presidents

achieved substantial success in ending the
guerrilla threat to Greek independence and
in strengthening Turkish defenses. In addi-
tion the act provides for military aid to cer-
tain other areas in the Middle and Far East.

The North Atlantic Treaty nations are
now^ proceeding with the development of an
integrated defense plan, the translation of
that plan into equipment and supply needs,
and a realistic determination of v^hat each
participant can do, both for itself and for the
others, in meeting those requirements. For
the current year the Congress provided i bil-
lion dollars for military assistance to the
Treaty nations, and 359 million dollars for
the other nations covered by the act. For
the fiscal year 195 1 1 am recommending new
obligational authority of i.i billion dollars,
including 500 million dollars new contract
authority.

Except for the previously authorized
Greek-Turkish program, expenditures in
1950 will be relatively low, owing to late
enactment of the new program and the time
required for agreement on joint plans and
for the subsequent determination of detailed
requirements. Expenditures in 1951 for
foreign military assistance will be almost
twice as great as in 1950, and may rise some-
what further thereafter, owing to the long
delivery time characteristic of military
procurement.

Philippine aid, — ^The special concern and
responsibility we feel for the progress of the
Philippine Republic have taken the principal
form, since the war, of assistance in the
physical rehabilitation of damaged facilities
and the payment of war damage claims.
The cost of both of these programs will de-
cline sharply in 1951 as they approach com-
pletion. We will continue to follow with
sympathetic interest the achievements of the
Philippine people and to assist them in mak-

ing their contribution to our common
objectives.

National Defense

Our expenditures for national defense
continue to be the largest item in the Budget.
Under current world circumstances, in which
the strength of the United States is making
such a vital contribution toward world peace,
we must continue to make the expenditures
necessary to maintain a position of relative
military readiness. At the same time, we
must plan our expenditures for national de-
fense so that we will achieve our purpose at
a reasonable cost, well within our capacity
to sustain over a period of years.

This Budget represents a further step to-
ward these objectives. It provides for active
forces in a high state of training, available
for immediate use if necessary and as a
nucleus for rapid expansion in the event of
an emergency, and for reserve forces, orga-
nized and trained for early mobilization if
necessary. This Budget contemplates the
continued development of planning for in-
dustrial mobilization and the accumulation
of a stockpile of strategic and critical ma-
terials. It continues to emphasize research
and development to keep our military tech-
nology abreast of scientific developments,
and procurement of newly developed weap-
ons to improve the equipment of the ready
forces. At the same time this program is
sufficiently flexible to provide a basis for
rapid changes should developments in tech-
nology or international conditions make
them necessary.

The recommendations for national defense
in this Budget take into account the progress
which has been made and can reasonably be
anticipated in the programs now being de-
veloped for the effective integration of our

Harry S. Truman, ig^o

Jan. 9 [9]

defense plans and organizations with those
of other North Atlantic Treaty nations.
These defense plans, together with our as-
sistance in strengthening the forces of these
countries through the mutual defense assist-
ance program, should provide an increasing
measure of security to free peoples on both
sides of the Atlantic as well as elsewhere in
the world.

For the past 2 years we have been adjust-
ing our military programs to achieve a bal-
anced structure which can be maintained
over a period of years without an undue
use of national resources. The National
Security Act of 1947 and the amendments
to that act in 1949 have provided a sound
organizational framework within which to
work toward this objective. Vigorous ac-
tions have been taken to reduce overhead,
to improve efficiency, to eliminate activities
of low priority, and to realign our armed
forces in accordance with a unified strategic
concept. As a result, the estimate of obliga-
tional authority for the 195 1 program of the
Department of Defense, including certain
obligations in 195 1 from 1950 authority, is 13
billion dollars, as compared with 14.2 billion
dollars recommended for 1950 in the Budget
a year ago.

My recommendations in this Budget pro-
vide for balanced land, naval, and air forces.
In order to avoid the creation of forces in-
volving commitments over a period of years
beyond what we could reasonably expect to
provide, I have had placed in reserve certain
authorizations for the current year which
were provided primarily for the expansion
of the Air Force. These recommendations
for the Defense Department for 195 1 con-
template substantially the continuation of
the revised 1950 program.

The estimated obligational authority of
13.7 billion dollars for 195 1 includes 4.0 bil-

lions for the Army, 3.9 billions for the Navy,
and 4.4 billions for the Air Force. In addi-
tion the recommendations include 0.8 billion
for other Department of Defense activities,
including retired pay and proposed legisla-
tion; and 0.6 billion for other national
defense activities, mainly stockpiling of stra-
tegic and critical materials. Of this obliga-
tional authority expected to be required in
1 95 1, 1 1.4 billion dollars is appropriations
and 1.4 billion dollars is contract authoriza-
tions, both requiring action by the Congress.
In addition, 873 million dollars is to come
from appropriations and contract authoriza-
tions which were placed in reserve in 1950
and are available for 1951 needs.

The estimated expenditures for national
defense in 1951 of 13.5 billions, including
stockpiling and other defense items, are an
increase of about 400 million dollars from
estimated expenditures for 1950. The in-
crease results almost entirely from procure-
ment and other commitments made under
authorizations previously approved by the
Congress. Expenditures in subsequent
years will reflect the reduction of new obli-
gational authority for 1951.

Military strength, — ^Extension of authority
for selective service, for which I plan to
submit legislation, is vital as a positive dem-
onstration of our resolve to maintain the
strength of the free world. With it we will
retain our ability to expand our armed forces
rapidly in an emergency and will also insure
adequate replacements to maintain the re-
quired strength of our active forces.

The extension of selective service author-
ity will provide a temporary solution to the
military manpower problem of the active
forces, but will leave unsolved the problem
of trained manpower for our reserve forces.
I point out again the necessity of a program
of universal training if we are to provide on

[g] Jan. 9

Public Papers of the Presidents

National Defense
[ Fiscal years. In millions ]

Expenditures

New obligational
authority for igsi
1949 1950 19s I Appropria-

actual estimated estimated tions Other

Program or agency
Department of Defense, military functions:

Pay and support of active duty military personnel . . $4, 435 $4, 590 $4, 287 $4, 292

Operation and maintenance of equipment and fa-
cilities 3> 41 8

Civilian components 539

Research and development 688

Aircraft procurement i, 230

Construction of ships 295

Major procurement other than aircraft and ships. . 198

Military public virorks

Industrial mobilization, service-wide administra-
tion and finance, interservice projects, and Office
of Secretary of Defense

Tentative estimate for proposed legislation (in-
cluding military public works)

Unexpended reimbursements from mutual defense

assistance program

Department of Defense, civil functions:

Pay of retired military personnel 191

Other 13

151

390

3,224
705
630

1,656
314
455
299

487

—50

3»294
740
606

2, 081
298
678
182

491

-225

241
9

345

3.406

757

^594

755

535
132

356

Activities supporting defense:

Stockpiling of strategic and critical materials

National Advisory Committee for Aeronautics . . .

Reconstruction Finance Corporation

Other

Tentative estimate for proposed legislation: Selec-
tive Service System

299

-17

580

--81

650
65

-48
22

400

Subtotal II, 914

Deduct 1950 obligational authority deferred to 195 1

13,148 13,545 ^11,381

'$1,937

240

Subtotal, Department of Defense 11, 548 12, 560 12, 852 ^ 10, 908 ^ 2, 177

100
15

2, 292
— 22 —851

Total 11,914 13,148 13,545 * II, 359 i, 44i

^Includes appropriations of 22 million dollars made for the fiscal year 1950 which will be available for
obligation in the fiscal year 1951.

^ Includes contract authorizations of 851 million dollars made for the fiscal year 1950 which will be avail-
able for obligation in the fiscal year 195 1.

* This Budget also includes 2,533 million dollars of appropriations to liquidate prior year contract author-
izations.

a continuing basis sufficient numbers of men
for the reserve forces, adequately trained to
use effectively the increasingly complex ma-
chines of war.

The total personnel assigned to combat
forces will be the greatest since the comple-

tion of the demobilization following World
War II, although the amounts recommended
for 195 1 will provide about 3 percent fewer
officers and enlisted personnel on full-time
active duty than at present. In 1951, it is
planned to continue the organized units of

Harry S. Truman, ig^o

Military Pay Strength
[ In thousands ]

Regular and reserves on jull-titne
active duty

Dec, 31, ig^i

Mar. 31, ig4g average

1948 (estimate) (estimate)

Anny 538 639 630

Navy and Marine Corps 488 492 461

Air Force 368 416 416

Total 1,394 1,547 i»507

Jan. 9 [9]

Reserves in drill pay
status

1951

October average

jg4g (estimate)

565 605

213 256

82 118

860

979

the reserve forces at approximately the
strength which is expected to be achieved by
the end of the current year, but with better
equipment, facilities, and training.

Under these recommendations for the
Army, this Budget wdll provide 10 divisions,
48 antiaircraft battalions, and other combat
and service units. Complementing the ac-
tive Army will be the National Guard with
350,000 personnel and the Organized Reserve
with 255,000 in regular training.

The Navy under these recommendations
will operate an active naval fleet of 652 ships
including 238 combatant ships. Six Marine
Corps battalion landing teams will be main-
tained. A total of 5,900 aircraft will be oper-
ated by the active forces, and 2,500 by the
reserve forces. Supplementing the Navy and
Marine Corps will be 204,850 members of
the Naval Reserve and 50,772 of the Marine
Corps Reserve in regular training.

It is contemplated that the active Air Force
will be organized into 48 groups and 13 sepa-
rate squadrons, approximately its present
strength. The Air National Guard and Air
Force Reserve will be organized into 27
groups and 25 base wings, respectively. A
total of 8,800 airplanes, from trainers to
heavy bombers, will be operated by the active
Air Force, and in addition 3,400 by the Air
National Guard and the Air Force Reserve.

Pay and support of active duty military
personnel, — ^The services of the officers and
enlisted men and women on active duty will

require 4.3 billion dollars, over one-third of
Defense Department military expenditures.
This will provide for pay, allowances, sub-
sistence, travel, and clothing for the active
forces at the new rates of pay and allowances
set by the Career Compensation Act of 1949.

Operation and maintenance of equipment
and facilities, — ^Estimated expenditures of 3.3
billion dollars will provide for operating and
maintaining the aircraft, ships and vehicles,
the airfields, training centers, hospitals, de-
pots, various headquarters, ports, and other
stations. Most of this amount will be re-
quired for the pay of civilian employees in
these activities. These employees constitute
the bulk of the approximately 725,000 civil-
ian employees expected to be engaged in
the military functions of the Defense Depart-
ment in 1 95 1. This represents a substantial
reduction from the 865,000 provided for in
the 1950 Budget.

Civilian components. — I have consistently
stressed the importance of the civilian com-
ponents of our armed forces. The Army
and Air National Guard and the Air Force,
Army, Navy, and Marine Corps Reserves
will require estimated expenditures of 696
million dollars in 195 1, as compared with the
663 million dollars estimated for 1950. This
will provide for the training of forces total-
ing 979,000, which approximates the number
expected to be in regular training by the
end of the current year. Continued im-
provements are planned in the equipment

[g] Jan. 9

Public Papers of the Presidents

available to these forces and in the effective-
ness of their training programs. In order
to overcome a major deficiency in the pro-
gram for these forces, I recommend that the
Congress authorize the construction of addi-
tional armories and similar training facilities.
Funds for this purpose are included in the
amount estimated for proposed legislation.

In addition the Reserve OflScers' Training
Corps of the Air Force, Army, and Navy
will necessitate expenditures of 44 million
dollars in 195 1 to provide a continuing
source of junior officers for the reserve forces
and a portion of the junior officers required
by the active forces. This w^ill provide an
estimated 19,000 new junior officers in 195 1,
an increase of 2,000 over the estimate for
1950.

Research and development, — ^The experi-
ences of the last war clearly demonstrated the
decisive importance in modern warfare of
superior weapons and equipment and of the
application of scientific research to the pro-
duction of new weapons and techniques of
combat. In peacetime, as well as war, sci-
entific and technical advances here and
abroad make possible continuing improve-
ments in the performance of military weap-
ons, and open to us and to other nations
the possibilities of new types of weapons
which can profoundly affect military con-
cepts and tactics.

We must continue a broad and active pro-
gram of military research and development.
The research and development programs of
the Department of Defense, together with
the related programs of the Atomic Energy
Commission, the National Advisory Com-
mittee for Aeronautics, and other agencies
of the Government, have as their objectives
to develop improved weapons and equip-
ment for the modernization of our military
forces, to exploit the possibilities of new
types of weapons and devise defenses against
them, and to stimulate scientific research

likely to have future military applications.

Expenditures of the Department of De-
fense for research and development in 1951
are estimated at 606 million dollars, slightly
less than in the current year. This amount
includes the principal costs of the research
and development activities, except for the
construction of research facilities and the
pay and support of military personnel en-
gaged in research and development activities.

Aircraft procurement, — ^Procurement of
complete aircraft will require expenditures
of 2.1 billion dollars in 1951 for approxi-
mately 2,300 airplanes, compared with 1.7
billion dollars for approximately 2,800 air-
planes in 1950. The change in average unit
cost reflects the increasing complexity and
cost of individual airplanes.

The recommendations in this Budget will
provide for new contracts to be made in 195 1
totaling 2.0 billion dollars, compared with
1.9 billion dollars in 1950. This contem-
plates that 851 million dollars of 1950 au-
thorizations being held in reserve will be
applied against requirements for aircraft to
be contracted for in 1951.

Approximately 3.3 billion dollars of un-
expended authorizations contracted for in
1950 and prior years will be carried forward
into 1 95 1. This carry-over, together with
the contracts to be made in 195 1, will provide
5.3 billion dollars of complete aircraft to be
delivered and paid for in 1951 and subse-
quendy. Under present procurement plans
it is estimated that, in addition to the 1951
deliveries of 2,300 airplanes, approximately
3,100 airplanes will be delivered in 1952 and
later years from authorizations provided
prior to that time.

Construction of ships, — ^Naval ship con-
struction will require 298 million dollars of
estimated expenditures in 1951. While no
new obligational authority is recommended
in this Budget, the 195 1 expenditures will be
only slighdy less than the 314 million dollars

Harry S. Truman, ig^o

Jan. 9 [9]

estimated for 1950. Various substitutions
and adjustments have been made during the
past year in the uncompleted portion of the
shipbuilding program. In addition to work
completed in 1951, 467 million dollars of
presently authorized naval ship construction
v^ill remain to be completed in 1952 and
later years.

Major procurement other than aircraft and
ships, — Major procurement other than air-
craft procurement and ship construction, v^ill
require expenditures of 678 million dollars,
a 50 percent increase over the estimate for
the current year and more than three times
as much as in 1949. This will provide,
mainly, combat equipment for Army and
Marine Corps troops, equipment for modern-
izing the fleet, noncombat vehicles for the
three military departments, and ammuni-
tion, torpedoes, and guided missiles. The
substantial increase in expenditures in 1951
results largely from the sizable expansion in
this program during the past 2 years. The
new obligational authority recommended for
195 1, totaling 755 million dollars, will be at
a moderately higher level than 1950. This
will continue the larger procurement pro-
gram embarked on in 1949 and continued
with increases in 1950.

Amounts included for combat vehicles,
artillery, guns, and other equipment for
Army and Marine Corps troops will permit
substantial modernization of the equipment
for the ready forces, and will reflect the prog-
ress of our research and development efforts.
It will provide an orderly step in the replace-
ment of the equipment left over from World
War II which by the end of 195 1 will be at
least 6 years old and therefore in need of
substantial improvements in design as a
result of technical and scientific develop-
ments. The equipment for modernizing the
fleet will give emphasis to the role of anti-
submarine warfare.

Military public wor\s, — Construction of

military public works will result in consid-
erably smaller expenditures in 1951 than in
1950. This is largely because only part of
the authorizations proposed in my 1950
Budget were enacted. Exclusive of the con-
struction for which legislative authorization
will need to be made, 1951 expenditures are
estimated at 182 million dollars compared
with 299 million dollars for 1950. This will
provide for such construction as housing for
troops and their families, operational facili-
ties, and facilities for research and develop-
ment. The obligational authority necessary
for additional projects not yet authorized by
legislation are included in the tentative esti-
mate for proposed legislation.

Industrial mobilization, service-wide ad-
ministration and finance, interservice proj-
ects, and Office of the Secretary of Defense. —
The Defense Department's part in industrial
mobilization planning will provide for main-
taining machine tools and stand-by industrial
plants, for tooling of pilot production lines,
and for placing educational orders, as well as
for continuing industrial mobilization plan-
ning studies with industry. Expenditures
for this purpose are estimated at 109 million
dollars in 1951 compared with 117 million
dollars in 1950.

Other Defense Department activities
largely of service-wide nature, will result in
expenditures estimated at 382 million dollars,
a slight increase from 1950.

Proposed legislation (including military
public worlds), — In order to provide for early
starts on projects and activities for which
legislation is proposed I am including an
estimate of 372 million dollars for new obli-
gational authority, the largest part of which
is for military public works for both regular
and reserve forces.

Unexpended reimbursements from mutual
defense assistance program, — The Defense
Department receives reimbursements for
some of the equipment which it takes from

41-355—65-

[9] Jan. 9

Public Papers of the Presidents

its stocks to ship to other countries under
the mutual defense assistance program.
The manufacture and delivery of equipment
out of these reimbursements will, for the
most part, not be possible before the follow-
ing year. Hence these reimbursements will
appear as credits in Defense Department
expenditures in 1950 and 195 1. As de-
liveries from these funds are made in future
years, compensating increases in Defense
Department expenditures will result.

Pay of retired military personnel, —
Amounts are appropriated annually to pro-
vide the cost of pay for retired military
personnel. The expenditures of 345 million
dollars estimated for 1951 provide this retire-
ment pay for persons whose services were
for the most part rendered prior to World
War II. The Government is at present in-
curring obligations for future payments at a
rate two and one-half times the current re-
tired pay expenditures.

Stockpiling of strategic and critical ma-
terials, — ^The stockpile program will provide
the means for augmenting the supplies of
materials expected to be available to us in
time of emergency. Accelerated progress
toward present objectives will be made dur-
ing the year since available supplies have
increased somewhat, pardy as a result of
orders placed previously to encourage new
development.

I recommend 500 million dollars of new
obligational authority for this program in
1 95 1. This amount when added to the au-
thority already available will provide total
authority for deliveries in 1951 and later
years of i.i billion dollars. Expenditures
are expected to rise from 580 million dollars
in 1950 to 650 million dollars in 1951.

The recommended new obligational au-
thority will bring the funds for the stockpile
to within 729 million dollars of the present
total objective of 3.3 billion dollars. By the
end of 195 1, 65 percent of the stockpile will

be delivered, and an additional 13 percent
will be under contract for delivery after 195 1.
We will be nearer to our goals for the mate-
rials the supply of which would be the most
susceptible to interruption, than for the
stockpile as a whole.

National Advisory Committee for Aero^
nautics and other activities supporting de-
fense, — ^Expenditures for all other activities
supporting defense will total 43 million dol-
lars, after deducting 48 milhon dollars of
net receipts in the defense activities of the
Reconstruction Finance Corporation. Slight
increases in funds will be necessary for the
National Advisory Committee for Aeronau-
tics to move forward with its basic research
activities in aeronautics. The funds for the
National Security Resources Board will be
maintained at about the present level, and the
cost of maintaining industrial reserve plants
by the General Services Administration will
decline slightly. Other activities provided
for include the Selective Service System as
well as various defense activities of other
agencies. The defense activities of the Re-
construction Finance Corporation, having to
do with rubber, tin, and fibers, will result
in larger receipts than expenditures, mainly
as a result of reduction of inventories.

Veterans' Services and Benefits

Expenditures of 6.1 billion dollars are esti-
mated for veterans' programs, one-seventh
of all Budget expenditures estimated for
195 1. The size of these requirements re-
flects the fivefold increase since 1939 in the
number of living veterans and the new read-
justment benefits provided for the World
War II veterans, as well as the increases in
rates of benefits and in services to veterans
generally.

Most of the expenditures for veterans'
benefits and services are not controllable by
the ordinary appropriation process. Ex-

Harry S. Truman, ig^o

Jan. 9 [9]

penditures depend largely on how many of
our 19,000,000 living veterans, and how
many dependents of deceased veterans, apply
and qualify for aid under some 300 laws.
The variable impact of veterans' programs
on the Budget is indicated by the fact that
expenditures for the fiscal year 1950 are now
estimated 1.4 billion dollars higher than they
were estimated a year ago. As a result, it
now is necessary not only to request restora-
tion of the appropriations for the Veterans
Administration eliminated by the last session
of the Congress, but also to recommend addi-
tional supplemental appropriations for 1950.

Expenditures in the fiscal year 195 1 are
estimated to decline 825 million dollars from
the level for the current year. In the next
few years we should be able to see a further
substantial reduction in Budget expenditures
for veterans' programs, as the temporary
readjustment benefit programs taper off or
expire under existing legislation. On the
other hand, it should be recognized that
permanent veterans' laws will necessitate
high expenditures for many years. In par-
ticular, expenditures for pensions and for
hospital and medical care will continue to
increase from year to year.

I have called attention in previous Mes-
sages to the responsibilities which our Nation
has toward its veterans and to our efforts to
assist them to resume as nearly as possible
their normal places in our society. We have
provided a comprehensive and complete pro-
gram of special Government benefits for vet-
erans of all wars — including extensive
economic aids, education and training assist-
ance, job reinstatement and preference
rights, as well as extensive medical and other
services. Veterans, as citizens, of course, are
also benefited under the general programs
developed in the last 15 years to maintain
high employment and to advance the Na-
tion's economic welfare.

Almost 2,000,000 veterans with disabilities

incurred in the service, and over 300,000
families of veterans deceased from service
causes, are now being assisted under the
veterans' programs. Our primary long-run
obligations in providing veterans' benefits
and services are to this group. We must
give them timely help to surmount the eco-
nomic and physical handicaps sustained as
the result of military service and to assist
them to assume the full responsibilities of
civilian life. In the last 2 years, substantial
additional increases in compensation rates
to dependents and to veterans of World Wars
I and II have brought the rates to this group
reasonably into line with the rise in the cost
of living since 1939.

The remaining 17,000,000 veterans are
practically all without service disabilities.
The Government has made available liberal
benefits to help all veterans of the two world
wars make the transition from military to
civilian life. The veterans of World War
II, in particular, have received readjustment
benefits to assist them in obtaining educa-
tion, training, jobs, businesses, and homes.
Most of the citizen-soldiers of World War II
returned to civilian life 4 years ago and have
had adequate opportunity to reestablish
themselves in their communities. The orig-
inal, sound purposes of the Servicemen's
Readjustment Act have largely been served.
Some of the benefits under the act have
already terminated and the need for others,
such as education and training benefits, is
drawing to a close.

Veterans without service disabilities will
continue to be eligible for liberal benefits
under the permanent veterans' laws after the
termination of temporary programs. At the
same time, these veterans are eligible in many
cases for benefits under the general social
security programs of the Government. Wc
now seek to improve and to broaden the gen-
eral social security programs to provide pro-
tection against the economic hazards of old

[9] Jan. 9

Public Papers of the Presidents

age, disability, illness, and unemployment.
The social security proposals pending in the
Congress apply to all the people, including
veterans. In the pending bill to improve the
old-age and survivors insurance system, vet-
erans would receive credit for the period of
military service during World War II toward
benefits under the system. On the other
hand, proposals are also pending in the Con-
gress to increase gready the special programs
for veterans, who with their dependents now
comprise about two-fifths of our total popu-
lation. There is real cause for concern that
we may overlook the close relationship of
these two systems and superimpose on the
general system of benefits an overlapping and
unwarranted series of special benefits for
veterans.

I again urge that in considering new or
additional aids for veterans without service
disabilities, the Congress judge their neces-

sity not merely from the standpoint of mili-
tary service, but also on the basis of benefits
under the general social security, health, and
education programs available to all the peo-
ple, including veterans. Our objective
should be to make our social security system
more comprehensive in coverage and more
adequate, so that it will provide the basic
protection needed by all citizens. We should
provide through the veterans' programs only
for the special and unique needs of veterans
arising direcdy from military service.

I am sure that our veterans are willing to
share with other citizens in the benefits
which can be gained for all through a posi-
tive program of economic and social advance-
ment. They recognize that their best inter-
est is inseparable from the best interest of
the Nation. For a democratic Nation like
ours can thrive only as all its citizens — veter-
ans and nonveterans alike — are enabled

Veterans' Services and Benefits
[ Fiscal years. In millions ]

Expenditures

1949
actual

Program or agency
Readjustment benefits (Veterans Administration) :

Education and training $2, 697

Unemployment and self-employment allowances . .

Loan guarantees

Other

Compensation and pensions (Veterans Administra-
tion)

Insurance (Veterans Administration)

Hospitals, other services, and administrative costs:
Construction:

Veterans Administration

Corps of Engineers (Army)

General Services Administration

Current expenses:

Veterans Administration:

Hospital and medical care 595

Other activities 345

All other agencies 2

510
40
87

2,154
95

34
108

1950
estimated

«)2,7i»

153

105

2,243
518

82
141

584

296

1951
estimated

l>2, 4»i
61
68
78

2,237
39

157
97

590
269

"New obligational
authority for 1951
Appropria-
tions

Other

$2, 681

.237
39

607
281

Total 6, 669 6, 905 6, 080 ^ 5, 847

^This Budget also includes 160 million dollars of appropriations to liquidate prior year contract author-
izations for hospital construction.

Harry S. Truman, ig^o

Jan. 9 [9]

through fair and equal opportunities to live
as self-respecting, self-reliant men and
women in a free and prosperous country.

Readjustment benefits. — By the end of the
fiscal year 195 1 it is estimated that under the
Servicemen's Readjustment Act 8,000,000
veterans will have received education and
training benefits at a cost of 12.9 biUion
dollars, and that 9,000,000 will have drawn
unemployment and self-employment allow-
ances totaling 3.9 billion dollars. In addi-
tion 2,400,000 veterans will have obtained
13 billion dollars in loans for homes, farms,
and businesses under the Government loan
guarantee program for veterans.

The average enrollment in school, job, and
farm training courses under the education
and training provisions of the Servicemen's
Readjustment Act is expected to decline from
1,986,000 in the current year to 1,837,000 in
195 1 and to require expenditures of 2.5
billion dollars.

The education and training program, how-
ever, is now considerably bigger than had
been expected. The average number of
participants in 1950 is estimated at 400,000
above the level anticipated a year ago.
Largely because of this unexpected increase
I shall soon transmit to the Congress a sup-
plemental appropriation estimate of about
700 million dollars to cover the higher ex-
penditures now estimated for the current
fiscal year. The bulk of the increase is in
schools below the college level, particularly
in trade and vocational schools. While en-
rollment in other courses is decreasing,
enrollment in these courses is still increasing
and in 1 95 1 is estimated to average 936,000 —
41 percent higher than in 1949 and 14 per-
cent higher than estimated for the current
fiscal year.

The continued expansion of enrollment in
schools below college level, more than 4 years
after most veterans have been returned to

civilian life, raises the question whether this
program still conforms to the original sound
objectives of the Servicemen's Readjustment
Act — ^to enable veterans to resume education
or training interrupted by the war or to
restore skills lost during military service.
There is some question whether large num-
bers of veterans enrolled in these schools are
in fact being trained for occupations for
which they are suited and in which they will
be able to find jobs when they finish their
training. I have asked the Administrator
of Veterans' Affairs and the Director of the
Bureau of the Budget to study this situation
thoroughly and to recommend to me any
corrective measures, administrative or legis-
lative, which should be taken to assure that
our expenditures for this program yield a
proper return both to the veterans and to the
Nation as a whole.

Since July 1949, under the terms of the
"GI bill", veterans discharged from service
remain eligible for unemployment and self-
employment allowances for only 2 years
after date of discharge. On the average
59,000 claimants are expected to draw allow-
ances, estimated at 61 million dollars, in the
fiscal year 195 1. This compares with an
average of 1,400,000 veterans receiving al-
lowances in the peak year of this program,
fiscal year 1947.

Under the Government loan guarantee
program, it is expected that 386,000 veterans
will obtain loans, almost all for homes,
amounting to over 2 billion dollars in the
fiscal year 1951. The estimated oudays of
68 million dollars for this program are chiefly
for the payment of the first year's interest on
the guaranteed portion of the loans. Ex-
penditures for losses on defaulted loans are
now relatively small, although the contin-
gent liability is sizable since the amount of
the Government guarantees is now about 48
percent of the total loans. In addition to

[9] Jan. 9

Public Papers of the Presidents

guaranteeing veterans' loans, the Govern-
ment also purchases guaranteed mortgages
held by financing institutions. (Mortgage
purchases are classified under housing and
community development.)

The "other" expenditures for readjust-
ment benefits cover allov^ances for burial
expenses of veterans, tuition and supplies for
disabled veteran trainees, and Government
grants for special housing for certain se-
riously disabled veterans.

Compensation and pensions, — It is esti-
mated that an average of 3,058,000 individ-
uals and families will receive compensation
and pension payments totaling more than
2.2 billion dollars in the fiscal year 1951.
Beginning in 1951 disability retirement pay-
ments of 78 million dollars to 31,000 Reserve
officers, shov^^n in this item in prior years,
have been transferred to the military retired
pay account of the Department of Defense.
Apart from this reclassification to national
defense, there is an estimated net increase
in 1 95 1 of 99,000 in the average number of
cases, and of 71 million dollars in expendi-
tures over the current year, entirely for cases
v^ithout service disabilities.

The 1 95 1 expenditure estimate of 2.2 bil-
lion dollars includes 1.5 billion dollars in
compensation for service-connected cases,
covering an average of 344,000 families of
deceased veterans and 1,981,000 veterans
with disabilities. The compensation and
pension total also includes 160 million dol-
lars for subsistence allowances to service-
disabled veterans in the vocational education
and training program. Pension payments to
an average of 732,000 non-service-connected
cases in 1951 are estimated to total 553 mil-
lion dollars, about two-thirds to living vet-
erans and one-third to survivors of deceased
veterans.

Insurance. — ^The Government reimburses
the veterans' life insurance trust funds for

payments on account of deaths traceable to
war hazards, and also pays directly certain
claims to veterans who failed to meet the
regular standards of insurability. The ex-
penditures in the fiscal year 1950 include
nonrecurring transfers of 413 million dollars
to the national service life insurance fund
arising from a resurvey of the Government's
liability for such contributions. Expendi-
tures in 195 1 for insurance claims payable by
the Government are estimated at 39 million
dollars.

Hospital and domiciliary construction, —
Construction of hospitals to provide 37,000
new beds and additional domiciliary facili-
ties, costing 872 million dollars, is now about
one-third completed. By June 1951 it is
estimated that three-fourths of the work will
have been done. When this program is fin-
ished, there will be sufficient beds to provide
adequately for foreseeable needs for all
service-connected cases and a more liberal
allowance of beds than at present for non-
service-connected cases. Obligational au-
thority already available is more than ade-
quate to meet the needs of the program now
under way.

Hospital and other services and adminis-
tration. — Current expenses for hospital and
medical care are estimated at 590 million dol-
lars in the fiscal year 195 1. About four-
fifths of these expenditures are for the in-
patient care program, and in this program
two-thirds of the cases currently are non-
service-connected. A daily average of
138,000 patients in hospitals and homes is
estimated for 195 1, about 9,000 more than
were cared for in 1949 and 4,000 more than
in the current year. The other one-fifth of
the expenditures is largely for the outpatient
medical and dental care programs.

Other current expenses, which are chiefly
the costs of administering and operating the
nonmedical benefits programs and of general

Harry S. Truman, igp

Veterans' Life Insurance Funds

{Trust accounts)

[ Fiscal years. In millions ]

Item
Receipts:

Transfers from general and special accounts

Interest on investments

Premiums and other

Total

Expenditures:

Dividends to policyholders

Benefits and other

Total

Net accumulation

administration of the Veterans Administra-
tion, are estimated to decline in 1951 to 269
million dollars.

Trust accounts, — ^The national service life
insurance and Government life insurance
trust funds operate as mutual insurance sys-
tems on a commercial pattern, except that
no administrative expenses are paid by them
and the amounts held in reserve and as sur-
plus are invested in Government obligations
by the Secretary of the Treasury. Veterans
of World Wars I and II and present service-
men now^ hold about 6,800,000 active policies
in these two systems. Premiums and earn-
ings, supplemented by Government pay-
ments of over 4 billion dollars for claims in-
volving deaths and disabilities resulting from
extra hazards of military service, have built
up assets in these two funds to an estimated
9.7 billion dollars at the present time.

The Government life insurance fund has
been on a dividend-paying basis since 1921.
A special dividend of 40 million dollars was
paid early in the fiscal year 1950. The first
national service life insurance dividend,
amounting to an estimated 2.8 billion dollars
and payable to all servicemen of World War
II who hold or have held policies, has been
declared. Payments are now scheduled to

1949
actual

255
431

775

382

393

382

Jan. 9 [9]

1950 1951

estimated estimated

$487
261
446

1,194

2,303
427

2,730

—1,536

$33
210
465

708

563
436

999
-291

begin shortly. It is estimated that 2.2 billion
dollars will be disbursed in the current fiscal
year and the balance in 1951 or later, as
applications are filed. In the next few years
a regular dividend schedule is to be estab-
lished for national service life insurance.
These dividends are not a Budget expendi-
ture since they are paid from the trust funds.

Social Welfare, Health, and Security

The coming year will be an extremely
significant one for the Nation's social secu-
rity program. The decisions of the Con-
gress on pending legislation will determine
the direction which this country will follow
in providing basic protection against the
major economic hazards of old age, unem-
ployment, illness, and disability. It is my
strong belief that it is a responsibility of the
Government to provide this protection, and
to provide it in a manner that is consistent
with our ideals of independence and self-
reliance — ^through the already established
and tested principle of contributory social
insurance. This was the basic philosophy
of the Social Security Act, in which the
major role was given to social insurance,
financed mutually by employers and em-

[p] Jan. 9

Public Papers of the Presidents

ployees, with benefits available as a matter of
right without a means test. Public assist-
ance was given only a supplementary role
to fill in the diminishing gaps in insurance
protection.

The effects of our failure in recent years
to carry out this philosophy are already
dramatized by the increase in the public
assistance rolls. Because the protection of
social insurance is so limited and inadequate,
far too many people have been forced to
seek public relief. In some States, for ex-
ample, half the aged people are on the relief
rolls. Approximately 2,700,000 aged people
and 1,500,000 dependent children now re-
ceive public assistance. By contrast, only
1,900,000 aged persons receive insurance
benefits and 800,000 children and their
mothers receive survivors benefits under the
old-age and survivors insurance system.
Average old-age insurance benefits are only
26 dollars a month compared with average
old-age public assistance benefits of 45
dollars.

Public demand for some form of basic
financial protection against loss of earning
power is evident in the keen interest of wage
earners in industrial pension and insurance
plans. There can be no question that our
society can and should provide such protec-
tion. What I wish to emphasize is that the
basic approach should be through a compre-
hensive public program of old-age, survivors,
and disability insurance, rather than through
a multiplicity of unrelated private plans,
which would inevitably omit large numbers
of the working population and treat others
unequally. Private plans and voluntary in-
surance can then provide desirable supple-
mental protection.

I urge that the Congress enact legislation
to expand and improve the old-age and sur-
vivors insurance system in accordance with
the recommendations made last spring.
Specifically, nearly all gainfully employed

people, including farmers and the self-em-
ployed, should be covered; benefits should
be increased sharply; and disability should
be added to the risks covered. It is also
important that the tax base be raised to the
first 4,800 dollars of earned income, not only
to reflect changes in wage levels since 1939,
but also to bring both receipts and benefits
to proper levels.

The recommended program will cover
about 85 percent of all employed people, and
will thus gradually reduce the need for pub-
lic assistance. In the meantime, however,
it is necessary to provide some help for those
persons not yet protected by social insurance,
as well as for those who would need public
aid even with an adequate social insurance
system. I therefore renew my recommen-
dation of last year that the program of Fed-
eral grants to States for public assistance be
extended and improved. The proposal that
I submitted to the Congress last spring was
designed to permit Federal sharing in the
cost of aid to needy persons excluded from
the present program, as well as in the cost
of essential medical and welfare services.
It was also designed to make Federal grants
more responsive to the financial resources of
each State. Within the framework of gen-
eral policy under the Social Security Act, the
States are responsible for determining the
size of benefit payments and the eligibility
of individuals for assistance. In adopting
amendments to the present program, we
should continue to rely on the States to bear
a considerable share of the financial responsi-
bility.

In the field of health, I presented a set of
recommendations to the Congress on April
22, 1949, oudining in some detail a program
for the Nation, centering in a national sys-
tem of medical-care insurance. Since that
time, the extension and enlargement of the
hospital construction program which I rec-
ommended has been enacted, and consider-

Harry S. Truman, ig^o

Jan. 9 [9]

able headway has been made on some of my
other recommendations. I hope that the
Congress will soon complete action on leg-
islation to increase Federal assistance to local
health services. Strengthening of these is
fundamental to our national health. In
addition, legislation should be enacted to
provide financial aid to medical and related
schools to encourage the training of addi-
tional medical personnel. In the case of
nurses, tuition scholarships and subsistence
aids should be made available for training
graduate nurses, and grants should be made
to States for vocational education for prac-
tical nurses, to encourage more young
women to enter the profession.

To fill in a major gap in our social security
system, I again strongly urge the adoption
of legislation providing for a comprehensive
system of prepaid medical care insurance.
This should be geared in with our other
social insurance programs and financed pre-
dominandy by employer and employee
contributions.

Action on these measures should no longer
be delayed. We cannot in good conscience
let our social security system remain in the
blueprint stage, and allow relief programs to
become our primary defense against want.

This Budget contains estimates for all of
my proposals. The greater part of them
would be financed through special taxes,
with receipts going into Government trust
funds and payments being made directiy
from the funds. Social insurance benefits,
by providing support for the aged and disa-
bled and their dependents, help to relieve
individual families, employers, and commu-
nities of this burden. At the same time, by
replacing the present haphazard arrange-
ments with a comprehensive pattern of social
insurance, we promote the stability of the
economy and preserve the self-respect of all
our citizens.

My proposals will add an estimated 271

million dollars to Budget expenditures in
1 95 1, principally in the form of grants to
States. Of this amount, 200 million dollars
is for improvement of public assistance and
67 million dollars for health programs.
These items, plus increases under existing
legislation in these two fields, are expected
to cause Budget expenditures for social wel-
fare, health, and security to rise in the fiscal
year 195 1 to a level of 2.7 billion dollars, an
increase of 417 million dollars over the cur-
rent year. Aside from proposed legislation,
the primary cause of the increase is a rise in
grants to States for public assistance and
hospital construction. Included in the total
is 594 million dollars representing the trans-
fer of pay-roll tax receipts to the railroad
retirement trust fund.

I recommend again that the Federal Secu-
rity Agency be given departmental status;
its functions are so important to the domestic
policies of the Government that the head of
this Agency should be a member of the
President's Cabinet.

Assistance to the aged and other special
groups, — Grants-in-aid to States for public
assistance to the needy aged, the blind, and
dependent children are expected to reach 1.2
billion dollars in 195 1 under the present pro-
gram, with the Federal share averaging
about 52 percent of total payments by State
and local governments to these groups. For
some time, the number of recipients has been
increasing and now exceeds 4,000,000 per-
sons; it is expected to average 4,600,000 dur-
ing 195 1. Average benefits are also expected
to continue their rise. As a result. Federal
expenditures will exceed those for the current
year by an estimated 55 million dollars. The
Budget contains an additional 200 million
dollars as the first-year expenditure estimated
for proposed legislation to cover all the needy
and to put the program on a variable grant
basis. The revised formula which I have
recommended would relate grants to the

[9] Jan. 9

Public Papers of the Presidents

Social Welfare, Health, and Security
[ Fiscal years. In millions ]

Expenditures

1949 1950 1951

actual estimated estimated

"New obligational
authority for 1951
Appropria-
tions Other

$922 $1, 146

4
75

579
5

161

603
10

259

8)1, 201
250

594

Program or agency
Assistance to the aged and other special groups:
Federal Security Agency:
Public assistance:

Present programs

Proposed legislation

Vocational rehabilitation:

Present programs

Proposed legislation

Other

School lunch (Department of Agriculture)

Retirement and dependents' insurance:

Railroad Retirement Board

Federal Security Agency and other

Promotion of public health:
Federal Security Agency:

Present programs

Proposed legislation:

Aid to medical education

Local health services

Children's Bureau grants

School health services

General Services Administration and other

Crime control and correction (Department of Justice

and other)

Indian welfare (Interior) and other

Accident compensation (Federal Security Agency) . .

Total 1, 907 2, 297 2, 714 ^ 2, 625 165

^This Budget also includes 151 million dollars of appropriations to liquidate prior year contract author-
izations.

$1,201
200

594
7

334

190

$163

lOI

financial resources of the individual States
and would also permit the Federal share to
be held within reasonable limits.

I am also proposing legislation to
strengthen the Federal-State program of vo-
cational rehabilitation and to provide addi-
tional opportunities for rehabilitation of the
more severely handicapped. By enabling
these people to become productive workers,
instead of liabilities to their families and
communities, we are enhancing our national
supply of skills and productive ability. The
Budget includes 4 million dollars for the first

year under the proposed legislation.

Railroad retirement insurance. — The
amount of 594 million dollars included as an
expenditure in the Budget is actually the
transfer of special tax receipts to a trust ac-
count for payment of benefits to retired rail-
road workers and their survivors. Apart
from credits for military service, the program
is financed by taxes on railroad wages, shared
equally by employees and employers. Under
present law, the transfers of tax receipts to
the fund must be made in advance of col-
lection and thus interest begins to accrue

Harry S. Truman, i^p

Jan. 9 [9]

to the fund before the taxes are collected. To
avoid this payment of interest on money not
yet received, the Congress should direct that
these taxes be transferred to the trust fimd
when received, as is now done with the old-
age and survivors insurance taxes.

I recommend also that the Congress revise
the procedure for making Federal Govern-
ment payments for military service credits
allowed to railroad employees. Such pay-
ments to the railroad retirement trust fund
should be made annually in the years ahead
on the basis of claims actually approved as
workers retire. As the law now stands,
these payments are made in advance, with-
out adequate relationship to eventual re-
quirements for actual benefits. To cover
such future claims, 193 million dollars has
already been advanced to the trust fund.
Unless the law is amended as recommended
in this Budget, further payments of approxi-
mately 33 million dollars will be required
in each of the next four fiscal years.

Promotion of public health, — ^Federal ex-
penditures for public health are mainly for
grants-in-aid to States and for research. Of
the 334 million dollars estimated for existing
programs in the fiscal year 1951, 213 million
dollars is for financial assistance to the States
for general public health services and for a
wide variety of special State and local pro-
grams, including hospital construction,
maternal and child health, tuberculosis con-
trol, and mental health. The increase of 75
million dollars in expenditures over 1950 for
existing programs is caused largely by a rise
in grants to liquidate prior years' hospital
construction authorizations. This program
is helping communities throughout the Na-
tion to reduce the hospital shortage.

Because adequate general public health
services are basic in our health program, I
am recommending that grants for this pur-
pose be increased by 9 million dollars, bring-

ing them up to 23 million dollars, the max-
imum authorized under existing law. An
additional 5 million dollars is included for
proposed legislation to increase these grants
beyond the existing ceiling. At the present
time, most of the counties of this Nation
lack, either wholly or in part, the basic local
public health services which must form the
foundation for our efforts to improve the
Nation's health. The increase permitted by
existing law will provide only a start toward
meeting this serious deficiency. New leg-
islation is, therefore, needed to remove the
existing statutory ceiling and provide a
sound basis for aiding States in the future
development of adequate local health
services.

Other proposed legislation is expected to
add 62 million dollars to expenditures, of
which 30 million dollars is for aid to med-
ical education to increase enrollments in
schools of medicine, nursing, dentistry, and
public health, and 7 million dollars is for
expansion of health and welfare services to
mothers and children. Expenditures under
pending legislation authorizing special
health services to school children are esti-
mated at 25 million dollars.

The direct research activities of the Public
Health Service and the grants to individuals
and institutions for research, teaching, and
training, will require an estimated 47 million
dollars in 195 1, a moderate increase over
1950. No provision is made in this Budget
for further expansion of Public Health Serv-
ice grants to medical schools for under-
graduate teaching and for construction of
additional research facilities on the basis of
special disease categories. This anticipates
early enactment of legislation for general aid
to medical education, which would contain
adequate provisions for aid to medical schools
in meeting their costs of teaching and in
constructing additional facilities. Such legis-

[9] Jan. 9

Public Papers of the Presidents

lation would permit an integrated program
of research and teaching at medical schools,
which should be far more conducive to good
results than separate financing for each
major type of disease.

Trust accounts, — Under the old-age and
survivors insurance, railroad retirement, and
Federal employee retirement programs,
benefit disbursements are made from the
trust funds and are not included in Budget
expenditures. On the receipts side, the pay-
roll contributions for old-age and survivors
insurance are transferred directly to the trust

fund and not included in total Budget re-
ceipts. Receipts and payments under the
proposed health insurance program would
also be handled in this manner. Railroad
retirement taxes, on the other hand, are
included in total Budget receipts and are
transferred to the trust account as a Budget
expenditure. The Government contribution
to its employee retirement funds is, of course,
a Budget expenditure (classified under gen-
eral government).

The money in these trust funds is invested
in Government securities, and the interest

Social Welfare, Health, and Security
{Major trust accounts)

[ Fiscal years. In millions ]

Fund and item actual

Federal old-age and survivors insurance trust fund:
Receipts:

Appropriation from general receipts |i, 690

Interest and other 233

Proposed legislation extending coverage, raising tax base, and

adding disability benefits

Payments of benefits and administrative expenses:

Present programs — 660

Proposed legislation

Net accumulation (including proposed legislation) i, 263

Railroad retirement account: ==:
Receipts:

Transfers from Budget accounts 574

Interest on investments 51

Payments of benefits, salaries, and expenses — 278

Net accumulation 347

Federal employees' retirement funds: =
Receipts:

Employee contributions 328

Transfers from Budget accounts and other 230

Interest 124

Payments of annuities and refunds, and expenses —221

Net accumulation 460

Medical care insurance trust fund (proposed legislation): ==

Receipts from pay-roll contributions

Payment for initial expenses

Net accumulation

1950

estimated

1951
estimated

$2, 245
261

$2,515
303

I, 200

-783

-867

~-i»433

1,723

1,718

602

—314

594

—346

349

312

374

353

306

140

—255

337

163

-276

566

578

250

—35

215

Harry S. Truman, i^p

Jan. 9 [9]

earned is added to the principal of each trust
fund. Accumulated assets now total 18
billion dollars.

Under present law, the old-age and sur-
vivors insurance tax rate advanced on Janu-
ary 1, 1950, to 1 54 percent each for employers
and employees. In view of the recom-
mended increase in benefits and addition of
disability coverage, I propose that the further
tax increase to 2 percent each, presently
scheduled for January i, 1952, be moved up
to January i, 1951, The proposed legisla-
tion would raise benefits in the fiscal year
195 1 from about 800 million dollars under
existing law to approximately 2.2 billion
dollars. Thereafter disbursements for bene-
fits can be expected to climb gradually as
claims mature. The 4 percent combined
tax should produce revenues of approx-
imately 5 billion dollars a year with employ-
ment at a high level, so that for the next
several years reserves would continue to
accumulate.

A period of preparation will be required
to set up the health insurance system. I am
proposing that in the meantime a small
pay-roll tax of one-fourth of i percent each
on employers and employees become effec-
tive January i, 195 1, to defray initial ex-
penses. Setting up this tax will also make
possible the establishment of eligibility and
other administrative records.

Housing and Community Development

Last year the Congress adopted as the
declared objective of national housing policy
"a decent home and suitable living environ-
ment for every American family." Real
progress has been made toward achieving
this goal. Private enterprise, with extensive
Government assistance, built a million new
houses last year, more than ever before, and
at generally reduced prices. Far-sighted
new legislation was enacted, which gives

practical support to private and local initia-
tive in clearing slums and developing our
cities, in providing special assistance for low-
income families in cities and on farms, and
in promoting better methods and lower costs
for all types of housing construction.

Our task this year is twofold. We must
continue to push ahead rapidly in carrying
out these major new programs. We must
also further improve Federal housing legis-
lation. In particular, to close the biggest
remaining gap, I am recommending legisla-
tion which will aid middle-income groups to
obtain adequate housing they can afford.

Budget expenditures for housing and com-
munity development are estimated at 1.3
billion dollars in 195 1. Of this total, almost
I billion dollars, or about 75 percent, repre-
sents the current estimate of expenditures for
mortgage purchases by the Reconstruction
Finance Corporation to support the private
mortgage market. The Corporation will
subsequently be reimbursed for its expendi-
tures in buying these mortgages, either
through collections or through sale to private
institutions.

Most of the Federal expenditures for hous-
ing and community development, including
mortgage purchases, are financed by public
debt authorizations rather than by appro-
priations. The public housing and urban
redevelopment programs will require rela-
tively small appropriations in the early years,
with substantial increases in later years. The
Federal Housing Administration insures
each year about 3 billion dollars in private
home mortgages, but since this is an insur-
ance operation it has only a minor effect on
current Budget expenditures.

Federal Housing Administration, — ^Al-
most half the record volume of private new
housing now under construction is being
financed with mortgages insured or guaran-
teed by the Federal Government, largely by
the Federal Housing Administration, and

b] Jan. 9

Public Papers of the Presidents

Housing and Community Development
[ Fiscal years. In millions ]

Expenditures

"New obligational
authority for 1 9S I

Program or agency
Aids to private housing:

Housing and Home Finance Agency:

Federal Housing Administration (present pro-
grams and proposed legislation):

Current operations

Investments in United States securities

Home Loan Bank Board: *

Home Owners' Loan Corporation

Federal Savings and Loan Insurance Corpora-
tion:

Current operations

Investments in United States securities ....
Loans to middle-income cooperatives (proposed

legislation)

Reconstruction Finance Corporation:

Mortgage purchases

Loans to prefabricators and builders, and other.
Loans to housing cooperatives (proposed legis-
lation)

Department of Agriculture

Public housing program:
Housing and Home Finance Agency:
Public Housing Administration:

Low-rent housing

War housing and other

Reconstruction Finance Corporation and other ....
General housing aids: Housing and Home Finance

Agency

Slum clearance and community development (in-
cluding community facilities):

Housing and Home Finance Agency

Reconstruction Finance Corporation

General Services Administration and other

Disaster relief (proposed legislation)

Total

79^9 igso 1951 Approprta-

actual estimated estimated tions

Other

-$33
30

— 119 —

-15
15

407
25

-II
53

-83

282

42
198

— 16
17

940
52

— I

18
20

-$30
31

— 134

18
50

990

136

—3
— I

S35

$25
250

30
5

325
54

1,006 1*329 ^117 704

* Stand-by borrowing authority of 1,750 million dollars is recommended to become available in 1950.
'This Budget also includes 18 million dollars of appropriations to liquidate prior year contract author-
izations.

also by the Veterans Administration (classi-
fied under veterans' services and benefits).
By removing all major risks from mortgage
lending, these insurance and guarantee pro-
grams make is possible for American families
to buy housing on substantially better terms

than they could obtain otherwise. About
350,000 other families now live in rental
housing which was financed by Government-
insured mortgages. In the case of both sales
and rental housing, established procedures
of the Federal Housing Administration, in-

Harry S. Truman, ig^o

Jan. 9 [9]

eluding inspections, provide assurance that
recognized housing standards are met.

As long as favorable economic conditions
continue, income from premiimis and other
sources v^ill exceed expenses and permit sub-
stantial investment in Government securities
to build up reserves against possible later
losses.

In the past year the mortgage insurance
program has successfully stimulated con-
struction of rental housing and lower-cost
housing for sale. I have already recom-
mended additional legislation to encourage
further the construction of lower-cost hous-
ing for sale. I shall shortly transmit recom-
mendations to provide, on a permanent
rather than an emergency basis, a more ef-
fective stimulus to lower rental housing.
For both rental and sales housing, the new
proposals would also provide needed incen-
tives to construction of units of adequate size
for family living.

Reconstruction Finance Corporation, —
Since last spring, the Federal National Mort-
gage Association, a subsidiary of the Recon-
struction Finance Corporation, has been
making heavy purchases of mortgages from
private lenders, of which the major portion
is guaranteed by the Veterans Administra-
tion. These purchases have made it possible
for veterans in all parts of the country to buy
houses on the advantageous terms offered
under the Servicemen's Readjustment Act.
Substantial commitments to purchase mort-
gages insured by the Federal Housing Ad-
ministration have also been particularly help-
ful in assuring the availability of adequate
funds for rental housing construction.

The continuing need for a stand-by sec-
ondary market does not mean that Govern-
ment purchases should be regarded as a
permanent substitute for private financing.
Accordingly, the administration of this pro-
gram will be directed toward encouraging
private lenders to hold a larger portion of

these mortgages as well as to repur-
chase the mortgages previously sold to the
Federal Government. Important adminis-
trative steps are being taken but they can be
only gradually effective, and substantial fu-
ture expenditures will be necessary to carry
through on the large volume of commitments
already outstanding. Estimated commit-
ments will exhaust the present authorization
of 2.5 billion dollars shordy after the close
of the current fiscal year. Because the rate
of commitment is uncertain, I am recom-
mending an additional 500 million dollars
in public debt authorizations in fiscal year
1950 and 250 million dollars in 1951.

Prospective expenditures for mortgage
purchases cannot be estimated accurately,
since their amount depends largely on
whether private lenders decide to hold the
mortgages as permanent investments or to
sell them to the Government. For example,
the initial estimate a year ago of 200 million
dollars in such purchases for the fiscal year
1950 was later revised upward to 1.3 billion
dollars and is now reduced to 940 million
dollars.

The Reconstruction Finance Corporation
also has special authority to lend up to 50
million dollars to producers of prefabricated
housing and large-scale builders using ad-
vanced construction methods. I recom-
mend that the Corporation be authorized to
lend an additional 25 million dollars for
these and related purposes. The accom-
plishments of this program to date have been
below our expectations, but the potential
benefits from the development of new hous-
ing production methods are so great that I
believe a further limited investment of Fed-
eral funds, building upon the experience al-
ready gained, will yield good returns.

Cooperative housing for middle-income
families, — Even with these various Federal
aids, enough private housing of the right
types is not yet being produced generally

[9] Jan. 9

Public Papers of the Presidents

throughout the country at prices which fam-
ilies with modest incomes can afford. As a
necessary supplement to our other housing
programs, I am recommending new leg-
islation to authorize Federal assistance to
cooperatives and nonprofit corporations in
building and managing housing projects.
Under the plan I am proposing, the Federal
Government would provide technical assist-
ance in organizing housing cooperatives and
adequate arrangements for their financing.
Through financial and other savings, mate-
rial reductions in rents or charges are
anticipated.

Because of the limited American experi-
ence with housing cooperatives, this pro-
gram initially must be viewed as experimen-
tal, and cannot be expected to attain a large
volume in 195 1. With proper Federal lead-
ership and assistance, however, it offers real
promise that middle-income families will be
able to help themselves obtain good housing
at costs within their means.

Home Loan Ban\ Board, — This Board
supervises the operation of the Home Own-
ers' Loan Corporation, the Federal home-
loan banks, and the Federal Savings and
Loan Insurance Corporation.

The Home Owners' Loan Corporation is
rapidly liquidating the remainder of its
mortgages by selling them to private lenders.
During the depression years, the Corpora-
tion made more than 3 billion dollars in
loans, thus enabling over 1,000,000 families
to keep their homes. By the end of the fiscal
year 1951, all of these loans will be repaid
or sold.

Savings and loan associations supervised
by the Federal home-loan banks provide
roughly a third of all home-mortgage financ-
ing. The share accounts of most of these
associations are insured by the Federal Sav-
ings and Loan Insurance Corporation. The
favorable experience of these associations in
recent years has permitted the Corporation

to build up reserves against possible future
losses. To further protect investors in these
associations in the event of future emergency,
I again recommend legislation to provide, on
a stand-by basis, authority for both the Fed-
eral home-loan banks and the Insurance
Corporation to borrow from the Treasury.
These provisions, which should become ef-
fective in 1950, would be roughly compara-
ble to the Federal assistance already available
for the commercial banking system. As in
the case of the banking system, moreover,
they should be accompanied by measures to
authorize more rapid repayment of the Fed-
eral Government's investment in these in-
stitutions, and to provide more effective and
specific authority for the Home Loan Bank
Board to regulate lending by the member
institutions.

Farm housing, — ^During the first 2 years
of the new farm housing program, about
40,000 low-income farmers will receive help
in obtaining better housing. In 1951, the
Department of Agriculture will lend an es-
timated 45 million dollars, as well as provide
general technical assistance and some direct
grants for farm repairs and improvements.

Public housing programs, — ^The Public
Housing Administration and local housing
authorities throughout the country have been
taking the steps necessary to get the new
low-rent public housing program promptly
under way. Preliminary loans have already
been authorized to assist 227 communities
plan projects which will comprise an esti-
mated 220,000 dwelling units.

Our goal is to have 175,000 units under
construction or completed by the end of the
fiscal year 1951. Most of the Federal ex-
penditures during this period will be for
temporary loans for planning, site acquisi-
tion, and initial construction. Private funds
will be used for much of the construction
financing and nearly all of the permanent
financing. The Federal Government indi-

Harry S. Truman, igp

Jan. 9 [9]

rectly guarantees the local housing authority
obligations issued for these purposes by con-
tracting to pay annual contributions suffi-
cient to maintain the low rents required for
the projects.

In addition, the Public Housing Adminis-
tration supervises the management and dis-
position of 450,000 permanent and tempo-
rary housing units constructed to meet
emergency war and veterans' needs. In the
fiscal year 195 1, an estimated 20,000 per-
manent units will be sold and 38,000 tem-
porary units will be transferred to local
agencies or demolished. This disposition of
both types of housing can be accelerated if
the Congress enacts the amendments to basic
legislation which I have previously recom-
mended. Expenditures of these programs
are more than covered by receipts from sales
and rentals; in addition to covering current
expenses, receipts from sales and rentals will
result in 62 million dollars in miscellaneous
receipts to the Treasury in the fiscal year
1951.

General housing aids, — Under recent
legislation, the Housing and Home Finance
Administrator is initiating the comprehen-
sive program of housing research which I
have long advocated as a necessity to achieve
our national housing objective. The long-
range objective of this program is to improve
knowledge about housing in order to aid in
cost reduction and in stimulating the in-
creased and sustained production of housing.
Emphasis is being placed upon development
of research plans with full participation by
other interested public and private groups,
so as to assure the maximum possible utiliza-
tion of existing information and research
facilities.

Slum clearance and community develop-
ment, — Orderly development and redevelop-
ment of our cities and metropolitan areas is
essential if we are to realize the full potential
growth in production and living standards

in the decades to come. Each city clearly has
the primary responsibility for initiating and
carrying through the far-reaching recon-
struction plans required to meet its peculiar
needs.

Under the provisions of the new slum
clearance and community redevelopment
program, the Federal Government now can
provide financial assistance needed to aug-
ment local resources. Actual development
will necessarily proceed gradually, area by
area, with carefully planned provision for
the housing of families displaced from slum
areas and for the uses most appropriate for
the redeveloped areas. For the first 2 years
of the program, Federal expenditures will
comprise loans to local public agencies to
help them prepare plans and begin acquisi-
tion of sites. When acceptable local project
plans are presented, the Federal Government
contracts to pay a maximum of two-thirds of
all net project costs. Contracts for loans
and grants up to 325 million dollars for the
fiscal year 195 1 are authorized in the basic
statute. The grants will not actually be paid
until several years hence when the land as-
sembly projects are completed, the redevel-
oped land sold or leased, and net project
costs finally determined.

The Reconstruction Finance Corporation
will continue to lend to public agencies for
transit lines, tunnels, and other self-liqui-
dating projects in cases where private fi-
nancing is not initially available on reason-
able terms. Private refinancing last year of
the large outstanding loan to the Triborough
Bridge and Tunnel Authority has made suf-
ficient funds available to finance the new
commitments currendy anticipated.

Under legislation enacted last year, the
General Services Administration is again
making advances to State and local govern-
ments for public works planning. These ad-
vances are repayable when the actual con-
struction occurs. The 2-year program of roo

[g] Jan. 9

Public Papers of the Presidents

million dollars will permit preparation of
plans for public works estimated to cost more
than 3 billion dollars. Every effort is being
made to achieve proper coordination in the
planning of Federal, State, and local public
works and to emphasize projects most appro-
priate in the event of possible economic
emergencies.

Major disasters in the future as in the past
will from time to time require prompt Fed-
eral assistance to stricken communities. I
again urge enactment of pending legislation
to provide in advance adequate funds to
meet such needs.

Education and General Research

If education and research are to play their
full role in strengthening our democratic so-
ciety, we must expand our basic research, we
must devise types of education that will pre-
pare youth more effectively for participation
in modern society, and we must provide bet-
ter educational opportunities for more of our
people.

It is predominantly a responsibility of all
government — ^local, State, and Federal — to
provide for the education of our citizens.
The Federal Government for many years
has given financial aid to special aspects of
education, such as vocational education, and
to institutions for special groups, such as
Howard University. It has become in-
creasingly evident that Federal support of a
more general character is needed if satisfac-
tory educational opportunities are to be made
available for all. The Nation cannot afford
to waste human potentialities, as we are
now doing, by failing to provide adequate
elementary and secondary education for mil-
lions of children and by failing to help hun-
dreds of thousands of young people who
could benefit from higher education.

The importance of this need requires that

we provide substantial Federal assistance to
States for general educational purposes and
for certain other important programs in this
field.

To progress toward these objectives, this
Budget includes expenditures for education
and general research (not including large
amounts in veterans, national defense, and
other categories) of 434 million dollars in
the fiscal year 1951, compared with 125 mil-
lion dollars in 1950. More than three-
fourths is for grants to States. The increase
is entirely accounted for by the additional
expenditures in 195 1 resulting from the new
legislation I am recommending. This leg-
islation will entail a further moderate in-
crease in later years.

Promotion of education — Elementary and
secondary, — ^The high mobility that charac-
terizes our people means that no State is
immune to the effects of ignorance and il-
literacy in other States. The welfare of the
Nation as a whole demands that the present
educational inequalities be reduced. Educa-
tional inequalities are primarily due to dif-
ferences in the financal resources of States
and localities. Income per capita in some
States is less than half as great as in others.
The States with the lowest incomes have the
greatest proportion of school-age children
and are unable to finance a fair educational
opportunity even with greater effort in terms
of tax burden.

School enrollments in practically every
State have risen recently and will continue
to rise owing to the increased birth rate.
Millions of our children are now taught in
overcrowded classrooms. For others edu-
cation is provided only on a part-time basis.
At the very time when we need more and
better teachers, schools must still employ
tens of thousands whose qualifications do
not meet the standards necessary to provide
a satisfactory quality of teaching. Because

Harry S. Truman, ig$o

Jan. 9 [9]

salaries are generally inadequate, too few
capable young people are preparing to enter
the teaching profession.

For these reasons I urge the Congress to
complete legislative action to permit the Fed-
eral Government to aid the States in support
of the maintenance and operation costs of
a basic minimum program of elementary
and secondary education. The Budget pro-
vides for beginning this aid in the fiscal
year 195 i.

There is a shortage of school buildings
in many parts of the country due to the
wartime deferment of construction and the
increase in the school-age population. In
many localities the need for facilities results
from the sudden and substantial impact of

Federal activities. I recommend that the
Congress enact legislation providing for
grants to States for surveys of their need
for facilities and their resources, and grants
for the construction of buildings in those
particular areas where Federal activities have
been responsible for increased enrollments.

For a number of years several Federal
agencies, under separate authorizations, have
been helping to finance the education of chil-
dren living on Federal property and in com-
munities affected by Federal activities. I
recommend that the Congress enact general
legislation to establish a single program for
all Federal agencies.

Promotion of education — Higher educa-
tion, — ^Large numbers of young people and

Education anu General Research

[ Fiscal years.

In millions ]

Expenditures

1949
actual

ipso
estimated

I9SI
estimated

"New ohligational
authority for 1951
Appropria-
tions

125

434

U55

Other

Program or agency
Promotion of education:
Present programs:

Office of Education (Federal Security Agency) . .
General Services Administration and Interior. .
Proposed legislation:
Elementary and secondary education:

General aid for operating expenses

Surveys and emergency construction

Children on Federal property and in emer-
gency areas

Higher education: General assistance to college

students

Educational aid to special groups

Library and museum services

General purpose research:
Department of Commerce:

Seventeenth decennial census

Odier Census Bureau programs

National Bureau of Standards

National Science Foundation (proposed legisla-
tion)

Other agencies

Total

*Less than one-half million dollars.
This Budget also includes 2 million dollars of appropriations to liquidate prior year contract authori-
zations.

$33

$34

$37

$38

290

7
I

300

10
I

[9] Jan. 9

Public Papers of the Presidents

adults wish to continue their education be-
yond high school in order to prepare for en-
trance to professional schools, to receive addi-
tional technical or vocational training or to
round out their general education. For
many of our people, postsecondary education
on a part-time or full-time basis, provided
in institutions located v^ithin commuting dis-
tance of home, would meet their needs at low
cost. Several of the States are now develop-
ing community institutions for this pur-
pose. I have asked the Federal Security
Administrator to make a comprehensive
study of this development in order to deter-
mine whether the Federal Government
might appropriately take any action to en-
courage the States and localities to estab-
lish and expand "community colleges."

Primarily because of low family incomes
and of the high costs involved, more than
half of our young people who could benefit
from a college education are now unable to
attend. This failure to develop to the fullest
extent the capacities of our young people
is a matter of national concern. As a step
toward correcting this situation, I shall trans-
mit to the Congress a legislative proposal to
authorize a limited Federal program to assist
capable youth who could not otherwise do so
to pursue their desired fields of study at the
institutions of their choice.

This Budget includes i million dollars as a
tentative estimate of appropriations needed
in the fiscal year 1951 to establish the re-
quired organization and to initiate the pro-
gram. Assistance to students would begin
in the fiscal year 1952.

National Science Foundation, — ^The Gov-
ernment is investing hundreds of millions of
dollars in research — primarily in applied re-
search in the military, atomic energy, and
health fields. We must consider, however,
not only the ways in which the great reser-
voir of scientific knowledge already at our
disposal can best be utilized, but also the

best paths to follow for the discovery of fur-
ther basic knowledge. To this end, we
urgently need a National Science Foundation
to stimulate basic research and to assure an
effective balance among the Federal research
programs. By developing a national research
policy and by formulating a truly national
research budget it should be possible to relate
the activities of public and private institu-
tions in a concerted effort to advance the
frontiers of knowledge. The Budget pro-
vides 500 thousand dollars for the initial
administrative expenses of the proposed Na-
tional Science Foundation, in the expectation
that the Congress will enact legislation, al-
ready passed by the Senate, to establish it.

Seventeenth decennial census, — ^The seven-
teenth decennial census of population, hous-
ing, and agriculture, to be taken this year,
will provide basic data essential to important
decisions by businessmen, governments, and
other groups throughout the Nation. Ex-
penditures for the census, estimated at 45
million dollars in 1950, will drop to 33 mil-
lion dollars in 195 1, and continue to decrease
in succeeding years as tabulation and publi-
cation of the results are completed.

Agriculture and Agricultural
Resources

American agriculture is in a period of
transition from the peak production require-
ments of the war and immediate postwar
years to the normal requirements of a peace-
time economy. During the war, every effort
was made to increase agricultural produc-
tion to meet the needs of our war economy
and of our allies. In some cases desirable
long-run goals for conservation of soil
resources were deferred in the effort to
increase production and to minimize the
manpower requirements in agriculture.
War dislocations and crop shortages abroad
created an abnormal export demand for food

Harry S. Truman, ig^o

Jan. 9 [9]

Agriculture and Agricultural Resources
[ Fiscal years. In millions ]

Expenditures

1949
Program or agency actual

Loan and investment programs:
Department of Agriculture:

Commodity Credit Corporation $1, 600

Farmers' Home Administration

Rural Electrification Administration

Other programs

Other agencies

Other financial aids:

Department of Agriculture:

Conservation and use (including acreage allot-
ments and marketing quotas)

Removal of surplus agricultural commodities. .

Sugar Act

International Wheat Agreement

Other agencies

Agricultural land and water resources

Other development and improvement of agriculture:

Present programs

Commodity Exchange Authority (proposed legis-
lation)

123

305

-63

182
75
56

— 2
59

177

1950
estimated

.533

362

285

63
82

161

I95I

estimated

$952

436

— I

314
114

69
76

149

l^ew obligational
authority for 1951
Appropria-
tions

$35
10
10
2

319

Other

$110
450

169

Total 2,512 2, 671 2, 206 875 580

^ Additional borrowing authority of 2 billion dollars is recommended, to become available in the fiscal
year 1950.

^ Less than one-half million dollars.

grains and a few other farm products, fi-
nanced largely by United States foreign re-
lief and aid programs. In the next few
years, this abnormal demand can be ex-
pected to adjust to a more normal level and
distribution pattern for world trade.

Although this transition from war to
peacetime needs has caused a decline in farm
prices and a loss in farm income, the opera-
tion of Government price supports has
served to cushion the decline and has been
a major factor in preventing a serious post-
war recession in the economy as a whole.
The resulting benefits to workers and em-
ployers, as well as to farmers, have been
many times the outlay of Federal funds. As
the necessary adjustments in agriculture are
completed, we should look forward to a re-

duction in budgetary expenditures for this
purpose. The need for food and fiber prod-
ucts will continue to expand as our national
income and population increase. Produc-
tion on existing land, however, must be
gradually shifted from the grains and cotton
to livestock and dairy production, permit-
ting marginal lands, whose soil is in danger
of loss from erosion of wind and water, to be
put back into pasture and soil-conserving
crops. It is important that Government
programs facilitate these adjustments within
agriculture as well as between agriculture
and the rest of the economy.

Federal agricultural programs, in addition
to promoting adjustments in agriculture and
stimulating conservation of soil resources,
are designed to improve the efficiency of

[g] Jan. 9

Public Papers of the Presidents

farm production, to provide low-income
farmers an opportunity to improve their
economic status, to assure farmers generally
a reasonable stability in farm income, and to
improve the level of rural living.

Total Federal expenditures for agriculture
and agricultural resources increased from
2.5 billion dollars in 1949 to an estimated
2.7 billion dollars in 1950. Both years reflect
the operation of price-support programs as
farm prices declined. A decrease of 465
million dollars is expected in 195 1, resulting
from smaller oudays on price supports as
acreage allotments and marketing quotas
serve to reduce production of some 1950
crops, particularly cotton and corn.

Price support, — ^Net outlays of the Com-
modity Credit Corporation amounted to 1.6
billion dollars in 1949. This was the first
year since before the war that mandatory
price supports have resulted in large cash
expenditures and the accumulation of loans
and inventories in the hands of the Corpora-
tion. Expenditures in 1950, estimated at 1.5
billion dollars, will be largely for corn and
cotton, with smaller outlays for peanuts,
rice, tobacco, milk and milk products, pota-
toes, beans, cottonseed, linseed oil, and vari-
ous other products. Approximately 90 mil-
lion dollars of the expenditures will be for
construction of new grain-storage facilities.
In 1 95 1, estimated Commodity Credit Cor-
poration expenditures decline to 952 million
dollars because of the expected effects of
acreage allotments and marketing quotas on
the 1950 crops. In later years, price-support
expenditures should decline further as pro-
duction is adjusted to normal demand.

Estimates for price-support expenditures
are, of course, highly tentative, since the
actual expenditures depend upon many fac-
tors which cannot be accurately forecast,
such as the volume of exports, the rate of
domestic consumption, and the influence of
insects and weather conditions on yields.

The operation of price supports has re-
sulted in the accumulation of large inven-
tories, particularly of cotton, wheat, and
corn. These commodity inventories repre-
sent assets which provide insurance against
possible crop shortages in future years. It is
estimated that the financial requirements of
the Commodity Credit Corporation in the
fiscal year 1951 may exceed its present bor-
rowing authorization. I recommend that
the Corporation be given an additional bor-
rowing authority of 2 billion dollars, to be
available beginning in 1950.

Farmers' Home Administration, — ^The
Farmers' Home Administration provides
management assistance to low-income farm-
ers, and makes loans for farm enlargement
and development, production and subsist-
ence, water facilities, homesteads, and farm
housing. (Farm housing loans financed
under the borrowing authorization provided
in the Housing Act of 1949 are classified
under housing and community develop-
ment.) The apparent decline in expendi-
tures for the Farmers' Home Administra-
tion in 1950 and 195 1 compared with 1949
is due to a shift in financing provisions. In
1949, loans were financed from appropriated
funds, and all loans were shown as expendi-
tures, with collections on old loans going
directly into miscellaneous receipts of the
Treasury. In 1950 and 195 1, most of the
loan programs will be financed by a borrow-
ing authorization, and the expenditure figure
will reflect loans less collections.

Rural electrification and rural tele-
phones, — On June 30, 1949, approximately
78 percent of all farms were electrified. As
coverage is gradually extended to the re-
maining areas. Rural Electrification Admin-
istration loans for electrification will decline.
Beginning in the fiscal year 1950, the Rural
Electrification Administration will also
make loans to rural telephone cooperatives
and other independent telephone companies

Harry S. Truman, ig^o

Jan. 9 [9]

under recently enacted legislation. Loans
for this purpose are expected to increase in
195 1. Net loan expenditures of the Rural
Electrification Administration are estimated
to be 427 million dollars in 195 1, compared
with 355 million dollars in 1950 and 299 mil-
lion dollars in 1949. I recommend that the
Rural Electrification Administration be
given new loan authority for the fiscal year
1 95 1 amounting to 450 million dollars, of
which 50 million dollars will be available for
the rural telephone loan program.

Conservation, — ^The Soil Conservation
Service provides technical advice and assist-
ance to farmers in establishing a sound pro-
gram of farm management to insure ade-
quate protection and development of soil
resources. Conservation practices are also
encouraged through the agricultural con-
servation payments program carried out by
the Production and Marketing Administra-
tion. By the end of the fiscal year 1951,
about 90 percent of the farms of the country
will be in organized soil conservation dis-
tricts. Progress is being made in the prep-
aration and application of desirable farm
management plans for the adequate protec-
tion of our soil resources, but still greater
emphasis will need to be given in future
years to soil and water conservation, includ-
ing the Department's upstream and on-the-
farm flood-control program, to reduce silta-
tion in the downstream areas and to enhance
the value of projects constructed by the
Bureau of Reclamation and the Corps of
Engineers.

Expenditures for the Soil Conservation
Service and for flood-control work of the
Department of Agriculture are expected to
increase from 64 million dollars in 1950 to
68 million dollars in 1951. Expenditures
for the conservation and use program and
for administering acreage allotments and
marketing quotas are estimated to be 314
million dollars in 195 1 compared with 285

million dollars in 1950 and 182 million dol-
lars in 1949. I am recommending that the
advance authorization for the conservation
and use program in the 1951 crop year,
which will largely determine expenditures
in the fiscal year 1952, be maintained at the
1950 crop year level of 285 million dollars.

Other financial aids. — ^Under the terms of
the International Wheat Agreement, the
United States will export 168 million bushels
of wheat each year for 4 years at a price not
in excess of |i.8o a bushel. In return, im-
porting countries have agreed to buy the
wheat at not less than certain specified min-
imum prices. In the first year, the effective
export price for United States wheat is $1.80.
It is estimated that the Commodity Credit
Corporation, through which the program is
financed, will spend 82 million dollars in
the fiscal year 1950 to bridge the gap be-
tween the $1.80 export price and the higher
domestic market price. In 1951, such costs
are estimated at y6 million dollars. The
Corporation is to be reimbursed for each
year's cost of the Wheat Agreement from ap-
propriated funds. In 195 1, an appropria-
tion of 82 million dollars is recommended to
reimburse the Corporation for the cost of
the Wheat Agreement in the fiscal year 1950.

Additional financial aid is provided for
farmers through the Sugar Act of 1948 and
through the permanent appropriation for
removal of surplus agricultural commodities.
Expenditures under the Sugar Act depend
on the volume of domestic sugar production
for which sugar growers receive payments
at the rates determined in the legislation.
It is estimated that expenditures under the
Sugar Act will be 69 million dollars in 1951.
The permanent appropriation for removal of
surplus agricultural commodities, established
in 1935, provides a fund each year equal to
30 percent of customs duties. In 195 1, it is
estimated that no million dollars will be
available in this fund.

[9] Jan. 9

Public Papers of the Presidents

Other development and improvement of
agriculture. — Included in this category are
the continuing basic services for agriculture,
such as research on crop varieties, livestock
and poultry, and the production and mar-
keting of farm products; control and erad-
ication of insects and plant and animal dis-
eases; payments to States for experiment
stations and cooperative extension work; and
the general overhead expenses of the De-
partment. For 1 95 1, I recommend legisla-
tion to strengthen the regulation of commod-

ity exchanges by the Commodity Exchange
Authority.

Natural Resources

This Nation has learned in recent years
what it means to have limited natural re-
sources. Our soil, forests, water, and min-
erals have been drawn upon prodigiously to
support two major wars and the rapid eco-
nomic growth of our country. If we are to
continue to expand production and employ-

Natural Resources

[ Fiscal years.

Program or agency
Atomic energy:

Atomic Energy Commission

Other agencies

Land and water resources:

Corps of Engineers (Army, civil functions)

Department of the Interior:

Bureau of Reclamation

Bonneville Povtrer Administration and South-
western and Southeastern power systems ....
Research in utilization of salt water (proposed

legislation)

Other

Tennessee Valley Authority (net)

Department of State and other

Forest resources:

Forest Service and other (Agriculture)

Department of the Interior

Mineral resources:

Bureau of Mines and other Interior

Department of the Navy and other

General resources surveys (Interior)

Fish and wildlife resources (Interior and other) ....
Recreational use of resources:

Department of the Interior

Baltimore- Washington Parkway (proposed legis-
lation)

In millions ]

Expenditures

"New obligational
authority for ig^i

^949 ^950 1951 Appropria-

actual estimated estimated tions

$621
I

401

240

63
3

29
13
13
18

$673

486

334

76
3

37
18
16
28

1,845

$817

563

398

96
13

82
2

20
20
29

2, 218

$266

557

355

108

84
I

35
15
20
26

'i>594

Other

$334

Total 1,512 I, »45 2, 2i« "1,594 37o

^ Less than one-half million dollars.

^ This Budget also includes 500 million dollars of appropriations to liquidate prior year contract authori

Harry S. Truman, ig^o

Jan. 9 [9]

ment we must use our remaining resources
with the greatest possible effectiveness, fol-
lowing sustained-yield principles, develop-
ing resources as yet unused, and restoring
where possible the resources we have
depleted.

A large share of the responsibility for such
action falls upon the Federal Government,
with respect to both resources on public
lands and resources in private ownership.
Atomic energy development depends upon
our pressing ahead with the present Federal
program on a broad scale. Continued eco-
nomic growth in large areas of our country
depends upon steady progress in Federal
investment for flood control, reclamation,
electric power, and related facilities. The
wisdom with which we utilize our mineral
resources will influence our economic
strength and security for generations to come.
Continued public investment in these areas is
a prerequisite in many fields to the expan-
sion of the private investment which we want
to encourage.

The dollars which the Federal Govern-
ment spends on these programs are largely
investment dollars. In many cases, such as
irrigation, power projects, and the manage-
ment and improvement of public lands and
forests, the activities are wholly or partially
self-liquidating. In all cases, economic
benefits will accrue to the Nation for many
years.

The 1 95 1 Budget provides for total ex-
penditures of 2.2 billion dollars in this area,
an increase of 373 million dollars from
1950. Over one-third of the total and of the
increase is attributable to expenditures for
atomic energy. The balance represents pri-
marily the requirements of projects under
way in the fields of flood control and recla-
mation. This Budget provides for no new
projects in these areas. Despite the large
number of highly meritorious projects which

have already been authorized for construc-
- tion, we should not at this time add to the
present high level of commitments. This
policy is necessary both because of our over-
all fiscal position and in order to provide
the greatest possible measure of stability, un-
der present economic conditions, in the rate
of Federal public works expenditures.

Atomic energy, — The United States is
seeking both to develop atomic energy for
national defense purposes and to realize
the great promise in its use for industrial
and other peacetime purposes. Our atomic
energy development program is a large ven-
ture in diverse fields — scientific research,
medicine, engineering, industry — and will
continue to require substantial outlays in
the next few years.

The 195 1 expenditures include increased
amounts for the production of fissionable
materials and weapons, and for the advance-
ment of the science and technology of atomic
energy, including accelerated construction of
new facilities and development of new types
of nuclear reactors. It is principally through
the development of new reactors to produce
fissionable materials and radioisotopes, gen-
erate power, and propel ships and aircraft,
that the Atomic Energy Commission expects
to evolve means of utilizing for peaceful
purposes the energy released by nuclear
fission.

Land and water resources, — ^We have
learned a great deal in recent years about the
extensive benefits which can be achieved by
proper development of our land and water
resources — ^including navigation, flood con-
trol, reclamation, power development, soil
and forest conservation, preservation of fish
and wildlife, and recreation. In the interest
of sounder and more efficient programs in
later years, emphasis in this Budget is placed
on more thorough investigation and ad-
vance planning, and on assembling more

41-355—^65

[9] Jan. 9

Public Papers of the Presidents

complete basic data. However, the frame-
work of Federal legislation and administra-
tive organization under which we are
carrying on development programs is in
many respects inadequate and obsolete.

In order to obtain a thorough review of
the present basic legislation, I have created
by recent Executive Order a Water Resources
Policy Commission, which will make recom-
mendations later this year with respect to
the broad policies which should guide Fed-
eral participation in the development, con-
servation, and use of water resources — ^both
upstream and downstream — and closely re-
lated land-use activities. On the basis of
these recommendations, I expect that it will
be possible to propose up-to-date and effec-
tive policies for the Federal, State, local and
private efforts which are needed to make
proper use of water resources throughout
the country. Some changes in present Fed-
eral legislation can and should be made at
this session of the Congress, but major
changes should be deferred until the Com-
mission's recommendations are available.

We also need to find more effective ar-
rangements for administering Federal laws
and programs concerning land and water-
resource development. I have already rec-
ommended that the Congress authorize the
consolidation of a number of Federal activ-
ities in the Pacific Northwest into a Colum-
bia Valley Administration, and provide for
its proper integration with other Federal
agencies and with State and local respon-
sibilities. In other areas also we should
be alert to the opportunities for better
administrative arrangements, building on
successful experience in the Tennessee Val-
ley and elsewhere, and adapting organiza-
tional patterns to the particular circum-
stances of different regions.

The activities of the Bureau of Reclama-
tion and the flood-control program of the
Corps of Engineers, involving the construc-

tion of dams, power facilities, canals, chan-
nels, and levees, will be limited in 195 1 to
continuation of work on projects started
in prior years. Bureau of Reclamation proj-
ects now under way will require an expendi-
ture increase of 64 million dollars in 1951.
Expenditures required in 195 1 to continue
going work of the Corps of Engineers will in-
crease by 77 million dollars over the 1950
total.

The expenditures by the Corps of Engi-
neers and Bureau of Reclamation will result
in materially increased power facilities in
the next few years. In addition, continuing
progress on the existing programs of the
Bonneville and Southwestern power systems
will result in a further increase in transmis-
sion facilities. An increase of 44 million
dollars is recommended for the Tennessee
Valley development, notably for expansion
of power facilities to meet the growing needs
of the atomic energy program.

Experience in recent years has shown that
it may not be possible to meet the shortages
of water, which are a threat in some areas,
through our extensive water-resource pro-
grams. I recommend, therefore, that the
Congress enact legislation authorizing the
initiation of research to find means for trans-
forming salt water into fresh water in large
volume at economical costs.

Public lands and national forests. — Over
many years, our policy with respect to public
lands and forests, now comprising over
900,000,000 acres, has gradually been broad-
ened from one of disposal to one of manage-
ment and conservation. The range, forest,
and mineral resources of these lands have
considerable commercial value and bring in
substantial receipts; in addition they have
important watershed, wildlife, and recrea-
tional value. In some respects, we have a
long way to go before we shall be managing
and conserving these resources to achieve
their full use and preservation. We should

Harry S. Truman, igp

Jan. 9 [9]

plan to expand our rehabilitation, protection,
and management of these resources in the
years ahead; the 195 1 Budget includes in-
creased funds for these purposes.

Mineral resources, — The Bureau of Mines
and the Geological Survey are carrying on
important investigations and research in
order to ascertain the extent of our mineral
resources and the best means of conserving
and using them. In v\&w of the limited
domestic supplies of many minerals, there is
real need for increased exploration and con-
servation of strategic and critical minerals.

Through laboratory research and develop-
mental vi^ork, including operation of demon-
stration plants, the Government has shown
that some of our liquid fuel demands can be
met from synthetic fuels produced from oil
shale and coal. This Budget includes funds
for a continuation of efforts to improve syn-
thetic liquid fuels, and to narrow^ the cost
differential betv^een synthetic and natural
petroleum products.

Use of recreational resources. — During
the past travel season there v^ere 32,000,000
visitors to the 181 national park areas. This
number of visitors is the highest in the his-
tory of the National Park Service; it is dou-
ble the number before the w^ar. This heavy
increase in the use of the park areas has
enlarged the requirements for their man-
agement and protection. The increase of
9 million dollars in the 1951 Budget for the
Park Service v^ill provide for additional
management and maintenance costs and for
some urgently needed construction.

Alas\an resources. — Alaska is a land of
large natural resources — forests, fish and
w^ildlife, minerals, land, and w^ater — v^hich
must be developed in order for the area to
make its contribution to the security and
economy of the Nation. The 195 1 pro-
grams discussed above include 23 million
dollars for the development of natural re-
sources in Alaska. Developmental expendi-

tures in Alaska under other functions — in
particular national defense, transportation,
and social welfare — will amount to approxi-
mately 162 million dollars.

Indian land resources, — Large areas of
Indian lands are rich in timber, oil, gas, and
other minerals, the conservation and devel-
opment of which should be related to pro-
grams affecting similar lands. As part of
our general program for protecting their
rights and for helping the Indians to become
self-reliant citizens, funds are included in
this Budget for initiating the long-range pro-
gram for the rehabilitation of the Navajo
and Hopi Indians in Arizona and New Mex-
ico. While the greater portion of the
amount recommended is for essential con-
struction of educational and health facilities
(classified in social welfare, health, and secu-
rity), provision is made also for expanded
conservation and development of the re-
sources of the reservations. Funds are also
included for some expansion in conservation
activities on Indian lands in other areas, as
well as for additional health, education, and
other benefits to the Indian population.

Transportation and Communication

Efficient transportation and communica-
tion services play a major role in promoting
the economic growth of our country and in
assuring our national security. Throughout
our history, the Federal Government has
traditionally supplemented private enter-
prise in this field, wherever necessary to as-
sure adequate services at reasonable cost.
To this end, the Government provides basic
facilities; it regulates economic and safety
aspects of commercial operations; it sub-
sidizes essential services which could not sur-
vive without Government aid. In the fiscal
year 195 1, an estimated 1.7 billion dollars
will be spent for these activities, a decline of
212 million dollars from 1950. This as-

[9] Jan. 9

Public Papers of the Presidents

sumes a reduction of the postal deficit to a
reasonable level, through enactment of
postal rate increases.

Most of the Federal transportation ex-
penditures are for the provision and opera-
tion of physical facilities. Direct Federal
expenditures for aviation facilities; marine
navigation aids, v^aterway improvements,
and roads will amount to about 600 million
dollars in 195 1. In addition, grants to State
and local governments for the construction
of highw^ays and airports will account for
514 million dollars. Although these pro-
grams make important contributions to the
development of our economy, over-all budg-
etary considerations make it impossible to
proceed with them as rapidly as we should
like. The 1951 Budget recommendations
have been held as close to the 1950 level as
program commitments would allow.

The long-term interests of the general tax-
payer, as well as the users of transportation,
will best be served by the development of a
balanced transportation system, substantially
independent of Government support. It is
essential that the various promotional and
regulatory activities of the Government fit
together into a unified transportation pro-
gram aimed at achieving that goal. At my
request, the Secretary of Commerce recendy
prepared a report outlining the major policy
issues which need to be resolved in order to
assure such a program. This report is now
being reviewed within the executive branch,
and I shall later transmit recommendations
for any legislation or other action that may
prove appropriate.

Merchant marine, — ^Under the Merchant
Marine Act of 1936, the Federal Government
provides both construction and operating
subsidies to the maritime industry, intended
to oflset the competitive effects of lower
foreign costs. In the fiscal year 195 1, oper-
ating subsidies alone are estimated to accrue

in the amount of 63 million dollars, about
five times the average annual level before the
war. Shipbuilding subsidies have recendy
averaged close to 45 percent of the domestic
cost of vessel construction, exclusive of na-
tional defense features financed entirely by
the Government.

I am seriously concerned by the increasing
cost of these existing subsidies and by the
potential cost of new subsidies now being
advocated. Our national security requires
an efficient nucleus of merchant shipping and
shipbuilding, adequate to permit such ex-
pansion as may be required by a future emer-
gency. However, to limit the burden on the
taxpayer, this subsidy program should be
held to the minimum level that will satisfy
national defense needs. In determining this
level, full account must be taken of the avail-
ability of vessels from friendly nations in the
event of an emergency. The existence of the
North Adantic Treaty provides a framework
within which joint international planning
of shipping mobilization may proceed.

The entire subject of Government aid to
the merchant marine is now under active
study by the executive agencies concerned.
Until such studies are completed, we should
proceed cautiously with existing subsidy pro-
grams, and should avoid commitments for
any major new programs. The Budget for
195 1 has been developed on that basis.

Expenditure increases in 195 1 for ship
construction and for operating subsidies will
be partially oflset by reductions in other
Maritime Commission activities. The mari-
time training program is being reduced in
size, and consolidated at three locations.
Authority for ship chartering, scheduled to
expire on June 30, 1950, does not now appear
to be required beyond that date. Expendi-
tures will also be lower for the liquidation
of wartime obligations.

Navigation aids and facilities, — ^The safety

Harry S. Truman, ig^o

Jan. 9 [9]

Transportation and Communication

[ Fiscal years.

Program or agency
Promotion of merchant marine:

Maritime Commission

Inland Waterways Corporation:

Present programs

Proposed legislation

Provision of navigation aids and facilities:

Panama Canal

Corps of Engineers:

Present programs

St. Lawrence seaway (proposed legislation)

Coast Guard

Interior

Promotion of aviation:

Civil Aeronautics Administration:

Present programs

Alaska airports (proposed legislation)

Provision of highways:
Bureau of Public Roads:

Present programs

Proposed legislation

Alaska roads (Interior)

Forest roads and trails (Agriculture)

Regulation of transportation

Other services to transportation:

Reconstruction Finance Corporation

Coast and Geodetic Survey

Alaska Railroad

Treasury Department

Postal service deficit:

Present programs

Proposed legislation

Regulation of communication

Alaska Communication System

In millions ]

Expenditures

"New obligational
authority for ig^i

ig4g igso igsi Appropria-

actual

estimated

tions

Other

$122

$161

$222

$135

$70

160

2X2

243
4

242
6

132

158

181

187

143

187

226
4

133

414

490

504

524

—3

{')

530

569

555
—395

555
-395

I, 622

1,894

1,682

973

673

Total

^Less than one-half million dollars.

^ This Budget also includes 591 million dollars of appropriations to liquidate prior year contract author-
izations.

of surface and air operations at sea requires
the navigational aids, rescue stations, and
other services provided by the Coast Guard.
Expenditures for these activities are esti-
mated to increase from 158 million dollars
in 1950 to 181 million dollars in 195 1. This

increase is largely for the replacement of
over-age aircraft, and for more adequate
maintenance of existing facilities.

The 1 95 1 recommendations do not pro-
vide for starting construction on any new
river and harbor projects of the Corps of

[9] Jan. 9

Public Papers of the Presidents

Engineers. Projects already under way will,
however, require an increase in expenditures
from 212 million dollars in the fiscal year
1950 to 243 million dollars in 195 1, and a
further increase in 1952.

I repeat most emphatically my previous
recommendations for approval of the Saint
Lawrence waterway and power project.
Authorization of the seaway, with its related
power facilities, is a matter of urgency for
our peacetime industry and our national
security. In particular, each succeeding year
reduces further our domestic reserves of iron
ore, and increases correspondingly the im-
portance of the seaway as a means of eco-
nomical access to the proven ore deposits
in Quebec and Labrador.

Aviation, — The Federal Government pro-
vides extensive aid, both direct and indirect,
to civil aviation. This assistance, which is
consistent with our traditional policy of pro-
moting new forms of transportation, has
made possible a spectacular development of
air transport services, especially during the
past decade. Although continued aid is
required for the present, the industry should
be expected to become increasingly self-
supporting in the near future.

At present, direct financial assistance to
the air lines is provided through air-mail
payments, which are set generally at levels
adequate to cover deficiencies in the carriers'
commercial revenues. Subsidy is thus
merged with the fair compensation for
carrying mail, making it difEcult to evaluate
the cost of this aid in relation to its benefits.
The recent rise in total air-mail payments —
to an estimated level of about 125 million
dollars in 1950 — has made it increasingly
important that the subsidy element be sepa-
rately identified. I recommend, therefore,
the immediate enactment of legislation to au-
thorize the separation of subsidy payments
from mail compensation. Such subsidies
should be paid from funds appropriated to

the Civil Aeronautics Board specifically for
that purpose.

The standard by which subsidy rates are
determined under existing legislation may
itself merit review in the light of the indus-
try's present stage of development. Setting
subsidies on the basis of the carriers' revenue
needs may weaken the incentives for man-
agerial economy, thereby increasing the dif-
ficulty of effective regulation by the Civil
Aeronautics Board. While a considerable
gain in efficiency has been realized by the
air Hnes since the end of the war, there are
undoubtedly important opportunities for
further improvement. The 1951 Budget
will permit the Civil Aeronautics Board to
conduct more intensive investigations of air-
line efficiency, and to develop operating cost
standards. This should assist the Board in
shaping its subsidy policies so as to retain,
to the maximum extent possible, the normal
business incentives for economy.

The continued growth of air transporta-
tion depends upon modernization of our air-
way facilities to permit safe and regular
flights under all weather conditions. Ex-
penditures for the development, installation,
and operation of such facilities are estimated
at 136 million dollars in the fiscal year 1951,
39 million dollars above 1950. Other ac-
tivities of the Civil Aeronautics Adminis-
tration — including safety regulation and
airport grants — ^will require expenditures of
93 million dollars in 195 1, 3 million dollars
higher than in 1950.

Highways. — Major development of our
highway system is required to overcome
obsolescence and to handle safely and effi-
ciently the steadily increasing traflSc loads.
This is primarily the responsibility of States,
counties, and municipalities. The Federal
Government must, however, continue pro-
viding financial assistance to the extent
necessary to assure a basic system of na-
tional roads, built to uniformly adequate

Harry S. Truman, ig^o

Jan. 9 [9]

Standards. Under existing legislation, the
Bureau of Public Roads is expected to spend
504 million dollars for highway improve-
ment in 1 95 1, mainly in the form of grants
to States. Apart from the emergency re-
lief programs during the depression, this will
be the highest annual level of Federal high-
way expenditures to date.

All of the Federal-aid funds thus far au-
thorized have been apportioned to the States,
and new authorizing legislation is therefore
required during the present session of the
Congress. I recommend that such legisla-
tion provide an annual Federal-aid authori-
zation for the next 2 years of 500 million
dollars, an increase of 50 million dollars
above the current level. Within this total,
increased emphasis should be placed upon
the Interstate Highway System, a limited
network of routes which is of greatest na-
tional importance to peacetime traffic needs
as well as to our national defense. The
recommended shift in emphasis, and increase
in program level, should permit a satisfac-
tory rate of improvement for this System.

Postal service, — ^Postal rates have not kept
pace with increasing costs and, as a result, the
postal deficit has reached excessive propor-
tions. Since 1939, the average expense per
postal transaction has increased by 67 per-
cent, owing mainly to higher wage and
transportation costs; in contrast, average
revenue has increased by only 32 percent.
On the basis of existing postal rates, the
deficit for 195 1 is estimated at 555 million
dollars. Cases now pending before the reg-
ulatory commissions may result in higher
payments for transportation, and hence may
correspondingly increase the deficit.

The Postmaster General is exploring fully
all opportunities for reducing the cost of the
postal operation. Modernization of the mo-
tor vehicle service, and the mechanization
of mail handling, are among the items re-
ceiving particular attention. I am confident

that the steps now being taken will in the
long run help to assure the maximum effi-
ciency of the postal operation. However, the
potential savings, if present service stand-
ards are maintained, appear small in rela-
tion to the prospective deficit; they do not
reduce significantly the need for higher
revenues at this time.

I have repeatedly urged the Congress
to raise postal rates so as to bring them
into line with postwar costs. The need for
such corrective action becomes steadily more
urgent. It is unsound and unnecessary for
the postal operation to continue as a growing
burden on the general taxpayer. Instead, the
users of the postal service should as a group
pay the full cost of services received. This
requires that the postal deficit be limited to
the cost of air-line subsidies. Government
mail, franked mail, and other items properly
chargeable to the general revenues.

Last year, the Postmaster General recom-
mended to the Congress postal rate revisions
designed to yield additional revenue of
about 250 million dollars per year. Subse-
quent increases in employees' pay and in
transportation costs have rendered this
amount inadequate. I therefore strongly
urge again that the Congress pass legislation
to bring the postal revenue more in balance
with the expenditures of the service. The
only alternative to increased rates or a con-
tinued large deficit would be an undesirable
reduction in the quality of services provided.
As a longer range solution to this problem,
there should be sufficient flexibility in the
postal rate structure to permit at all times a
proper relationship between revenues and ex-
penses.

Regulation, — Through regulation, the
Federal Government seeks to assure the ade-
quacy, economy, and safety of transporta-
tion and communication services. Although
the expenditures required for this activity
are relatively small, this is one of the more

[p] Jan. 9

Public Papers of the Presidents

important responsibilities exercised by the
Government in this field. The 195 1 Budget
includes moderate increases for the regula-
tory commissions, to permit them to reduce
backlogs of pending cases, and to meet new
problems more prompdy.

Finance, Commerce, and Industry

As part of its broad program for balanced
economic development, the Federal Gov-
ernment provides a variety of general finan-
cial and other aids to promote the stability
and growth of independent businesses.
These are supplemented by regulatory action
designed to remove monopolistic barriers
to production and commerce. In addition,
in two areas — exports and rents — it is neces-
sary to continue, on a limited basis, wartime
controls now in effect. Total expenditures
in 195 1 are estimated at 212 million dol-
lars, of which net expenditures for loans to

business will account for about three-fourths.
Business loans and guarantees, — In the
past year, the Reconstruction Finance Cor-
poration has contributed substantially to the
financial stability of independent businesses,
especially small business. The change in
economic conditions last spring resulted in
many financing needs which private lenders
failed to meet, and consequently applications
for Reconstruction Finance Corporation
business loans increased rapidly. During
recent months, the Corporation has been
making about 450 new loans per month, or
nearly twice the rate of a year ago. With
the favorable business outlook now antici-
pated, a somewhat lower level of new loan
authorizations is estimated in 1951, but net
expenditures are expected to rise above 1950
because of disbursements on loans author-
ized this year. In future years, repayments
will provide increasing offsets to disburse-
ments on new loans.

Finance, Commerce, and Industry

[ Fiscal years. In millions ]

1949
Program or agency actual

Business loans and guarantees (Reconstruction Fi-
nance Corporation, present programs and proposed

legislation) $65

Promotion and regulation of business:
Department of Commerce:

Promotion 23

Export control 3

Antimonopoly programs (Federal Trade Commis-
sion, Justice) 7

Rent control (Housing Expediter, present programs

and proposed legislation) 22

Other 7

All other:
Preferred stock of financial institutions (Recon-
struction Finance Corporation) — 14

Control of private finance 7

Total 120

* Less than one-half million dollars.

Expenditures

1950
estimated

$153

25
3

22
7

225

1951
estimated

I155

23
2

-6

"New obligational

authority for 1951

Appropria

tions

Other

$250

$20
3

16
6

250

Harry S. Truman, igp

Jan. 9 [9]

To make sure that this program will meet
the needs of business for long-term credit,
I am renewing the recommendation for a
substantial increase in the present lo-year
maximum on loan maturities. I also recom-
mend an addition to the funds available for
business loans.

Promotion and regulation of business, —
Since the war we have substantially strength-
ened our antimonopoly program, but con-
tinued improvement is essential. I have
asked the Secretary of Commerce, in con-
sultation with the Attorney General, the
Federal Trade Commission, and the Council
of Economic Advisers, to develop recom-
mendations for increasing the effectiveness
of this program. A major aspect of this
study will be the development of methods to
facilitate establishment of small businesses,
to promote their stability and growth, and
to remove obstacles to their survival as inde-
pendent competitive enterprises.

The Budget also provides additional funds
for strengthening the antimonopoly activi-
ties of the Federal Trade Commission.
Among other things, this will permit a study
of trends in industrial concentration to guide
the formulation of Federal policy and to aid
in prosecuting specific cases.

As the record levels of housing construc-
tion have gradually reduced the housing
shortage, rent controls have been removed
in many communities. This trend probably
will continue. To prevent serious hardship
to tenants in areas where shortages remain
critical, I am recommending a i-year exten-
sion of rent control authority beyond the
present expiration date of June 30, 1950.

Improvement in the supply situation has
permitted removal of most commodities
from export control. Export licensing of
some strategic commodities, however, re-
mains essential because of the uncertain in-
ternational situation.

Labor

The programs of the Federal Government
in the field of labor are designed to encourage
increasingly effective use of our major pro-
ductive resource — ^the skill of the American
workingman — with the ultimate objective of
assuring higher production and standards
of living. To this end, the Government
fosters responsible and peaceful labor rela-
tions based on collective bargaining by offer-
ing voluntary mediation services and provid-
ing a remedy for unfair labor practices. It
promotes fair labor standards for wages,
hours, and employment conditions to prevent
exploitation and unfair competition based
on substandard conditions. It finances a
free placement service to aid industry, agri-
culture, and workers and insures workers,
mainly through a Federal-State system,
against total loss of income during periods
of temporary unemployment. Finally, it
collects and publishes information on wages,
employment, prices, construction, and other
subjects in order that business and economic
planning and decisions may be on a factual
basis.

The importance of these programs is by
no means measured by the total expenditures
of 243 million dollars in 195 1, since many
of the activities are regulatory in nature and
require only minor expenditures. Of total
expenditures, about 70 percent consists of
grants to States for administration of the
Federal-State employment service and un-
employment compensation system.

Placement and unemployment compensa-
tion activities, — ^The Federal Government
sets standards and pays all administrative
costs for State operation of public employ-
ment oiEces and unemployment insurance.
Public employment oflSces placed applicants
in more than 12,000,000 jobs during the past
fiscal year. Of the total job placements, over

41-355—65-

-10

[9] Jan. 9

Public Papers of the Presidents

7,000,000 were on farms. Still more place-
ments are expected in 1950 and 195 1.

The unemployment compensation work
load is closely related to general economic
conditions. Last year the Congress recog-
nized this fact by appropriating a contin-
gency fund of 5 percent of the basic grants,
to be used if the number of claims increased.
It now appears that this contingency fund
will not be sufficient to pay for the increase
in work load which has occurred. I shall,
therefore, request a supplemental appropria-
tion for 1950. For 195 1, the Budget recom-
mendations for the basic grants assume a
somewhat lower average level of unemploy-
ment but call for a contingency fund of 10
percent to obviate delays in paying valid
claims, should the volume of claims suddenly
rise.

Mediation and regulation of labor rela-
tions, — In my State of the Union Message I

have discussed the imperative need for basic
revision of the Labor-Management Relations
Act of 1947 to incorporate sound provisions
on the rights and responsibilities of labor
and management in relation to each other
and to the general public, and to remove
unworkable administrative provisions in the
present law. This Budget allows for im-
proving mediation and conciliation activities
by providing funds to permit relatively equal
service for all parts of the country and for
the recently expanded organization for ad-
justment of employee grievances in the rail-
way industry.

Labor standards and labor training, — The
1949 amendments to the Fair Labor Stand-
ards Act, while inadequate in many respects,
made substantial improvements in the law
by raising the minimum wage to 75 cents
an hour and tightening the provision against
the use of child labor in production for inter-

Labor
[ Fiscal years. In millions ]

Expenditures

Program or agency
Placement and unemployment compensation activi-
ties:
Department of Labor:

Present programs

Proposed legislation (mainly reinsurance

grants)

Railroad Retirement Board

Federal Security Agency

Mediation and regulation of labor relations

Labor standards and training:
Department of Labor:

Present programs

Industrial safety program (proposed legisla-
tion)

Department of the Interior (mine safety)

Fair Employment Practice Commission (proposed

legislation)

Labor information, statistics, and general adminis-
tration

1949
actual

*i5

148

New oMigational
authority for 19^1
1 9 so J 95 1 Appropria-

estimated estimated tions Other

I137

37
12

I171

12
9

$194

13
10

Total .

193

219

243

266

Harry S. Truman, ig^o

Jan. 9 [9]

state commerce. I am recommending in-
creased funds for the additional inspection
and legal staff which effective enforcement
will require. Such enforcement is essential,
not only to protect the purchasing power of
workers who need it most, but also to pro-
tect law-abiding employers from unfair
competition.

Two legislative proposals respecting em-
ployment conditions, and one on training,
should be enacted promptly. First, a per-
manent Fair Employment Practice Commis-
sion should be established. To keep minor-
ity groups economically submerged is not
only unjust and discriminatory, but also
prevents the best use of available manpower.
Secondly, I am renewing my recommenda-
tion for grants to States to assist them to
encourage industrial safety. The Federal
Government and the States spend many mil-
lions of dollars each year to rehabilitate in-
jured workers. It is only common sense to
do what we can to prevent injuries in the
first place. Finally, I recommend that a
labor extension service be established in the
Department of Labor to make available to
wage earners educational programs designed
to promote sound labor-management rela-
tions. Such a program would require about
3 million dollars a year after it gets into op-
eration but would not have substantial effect
on the 195 1 Budget because of the time re-
quired to get under way at the local level.

Trust accounts and unemployment com-
pensation legislation, — ^Last year's temporary
but sharp rise in unemployment provided the
first real test of the Federal-State unemploy-
ment insurance system since its establishment
15 years ago. The system was of great help
in tiding workers over temporary unemploy-
ment and in sustaining markets for the prod-
ucts of employed workers. During the last
12 months, a total of 1.7 billion dollars in
benefits was paid from the trust fund. At
the same time, major shortcomings of the

present system became painfully clear. It
does not cover enough workers, and does not
replace enough of the wages lost through
unemployment. I shall submit proposals for
legislation to overcome these and other de-
fects by strengthening the present Federal-
State system.

At present, only about two-thirds of the
workers employed in nonagricultural indus-
tries are insured against the hazards of tem-
porary unemployment. Coverage should be
extended to employees of small establish-
ments, of industries processing agricultural
products, and of the Federal Government.
This would raise coverage to about three-
fourths of nonagricultural workers. Fur-
thermore, legislation should include mini-
mum Federal standards for eligibility and
disqualifications, in order to remove some
of the present inequalities in administration
among the States.

Present weekly benefits now average about
one-third of previously earned weekly wages.
The insurance was originally intended to
replace at least half of previous earnings —
the minimum needed to pay for food and
rent — but benefits in many States have not
kept up with price rises. In order to assure
more nearly adequate benefits throughout
the Nation, the Federal law should provide
minimum standards for benefits paid from
the State trust accounts. These standards
should require benefits of 50 percent of pre-
vious wages up to 30 dollars a week for
single workers, with additional amounts for
dependents up to 42 dollars a week for a
worker with three dependents. The legis-
lation should also require that benefits be
available to eligible claimants for at least 26
weeks.

In addition to these changes in coverage
and benefit standards, I shall recommend
amendments to the financing provisions of
present legislation, including establishment
of a reinsurance system to provide grants to

[9] Jan. 9

Public Papers of the Presidents

Unemployment Trust Fund

{Trust accounts)

[ Fiscal years. In millions ]

1949
Item actual

Receipts:

Deposits by States and railroad unemployment taxes $994

Interest 180

Payments: State and railroad unemployment withdrawals — i, 327

Net accumulation — 153

1950 1951

estimated estimated

$1,018 $1,193

162 165

—2,034 —1,570

-854

States whose reserves for benefits become
temporarily low, despite reasonable measures
to maintain adequate funds. Although most
States have sufficient reserves to pay higher
benefits without increasing taxes, one or two
States may need assistance by next autumn
or shortly thereafter.

The proposed legislation will affect chiefly
the trust fund rather than the appropriations
for administration. For both the trust fund
and the appropriations, the effect in the fiscal
year 1951 will be slight because time will be
required for the State legislatures to revise
their laws to conform with new standards
established by the Congress. Benefits for
Federal workers will represent the principal
continuing budgetary cost of my recommen-
dations. (The estimated expenditures for
these benefits in the fiscal year 195 1 are
shown under general government.) Esti-
mates for proposed reinsurance appropria-
tions are also included in the Budget. Ex-
penditures from these appropriations will be
necessary only if State reserves become in-
adequate to provide for temporarily high
numbers of insured unemployed.

General Government

The expenditures for general government
cover legislative, judicial, and financial
management activities, and also many
Government-wide administrative services
and programs such as property and records

management, public buildings construction
and maintenance, and the operations of the
Civil Service Commission. The total ex-
penditures for these programs for the fiscal
year 1951 are estimated at 1.3 billion dollars
compared to 1.2 billion for the current fiscal
year. The increase is primarily for strength-
ening further the system of tax collection, for
the Government payment to the employees'
retirement system, and for public building
sites and plans.

Internal revenue operations, — ^Efficient op-
eration of the Bureau of Internal Revenue,
the Federal Government's primary tax col-
lection agency, is essential to protect the Fed-
eral revenue and to assure fair treatment to
taxpayers. Studies of the organizational
structure and administrative procedures of
this agency have been under way for some
time and have already resulted in many im-
provements, including the mechanization of
some operations. These have enabled the
Bureau to strengthen and extend its audit
and enforcement activities, thereby collect-
ing additional taxes, not only directly, but
also by stimulating a greater degree of vol-
untary compliance. Further improvements
are in prospect. The 1951 appropriation
provides for increased funds for these
purposes.

Property management, — Under mandate
of the Federal Property and Administrative
Services Act of 1949, the General Services
Administration was established to consoli-

100

Harry S. Truman, ig^o

Jan. 9 [9]

date a number of Government-wide activities
concerned with the procurement, mainte-
nance, and disposal of Federal property.
This was in accord with a major recommen-
dation of the Commission on Organization
of the Executive Branch of the Government.
The General Services Administration is cur-
rently undertaking to establish records stor-
age centers and is emphasizing the expansion
of inspection services and traffic manage-
ment, determination of purchasing re-

quirements, and controls to insure proper
utilization of Government property.

Civilian employees* retirement system. —
Federal employees covered by the civil serv-
ice retirement and disability system are re-
quired by law to contribute 6 percent of their
salaries toward future benefits; the Govern-
ment contributes the remaining cost of bene-
fits provided under the system. The
expenditures of 333 million dollars estimated
for 195 1 represent the Government payment

General Government

[ Fiscal years.

Program or agency

Legislative functions

Judicial functions

Executive direction and management

Federal financial management:

Bureau of Internal Revenue (Treasury)

Customs collection, debt management, and other
(mainly Treasury)

General Accounting OflSce

Other central services:

Property management (mainly General Services
Administration)

Civil Service Commission

Legal services (Justice)

Government Printing Office

Special fund for management improvement

Government payment toward civilian employees*

general retirement system

Interest on refunds of receipts

Public buildings construction (General Services Ad-
ministration

Weather Bureau (Commerce)

Cemeterial program (Army and American Battle

Monuments Commission)

Immigration control (Justice)

Other:

Present programs

Unemployment compensation payments to Federal
workers (proposed legislation)

Civil rights program (proposed legislation)

In millions ]

Expenditures

1949
actual

$34

208

1950
estimated

$43

230

135

136
36

169

139

224
87

301
93

22
24

58
30

30
32

1951
estimated

$50
31
12

253

134
37

Islew obligational
authority for 1951

Appropria
tions

139

333
100

53
26

13
I

253

133

333
100

28
26

13
32

14
I

Other

Total 1,170 1,223 1,267 *i,23i 3

^ This Budget also includes 41 million dollars of appropriations to liquidate prior year contract author-

lOI

[9] Jan. 9

Public Papers of the Presidents

necessary to enable the fund to cover its
currently accruing obligations.

Construction of public buildings. — ^0£ esti-
mated expenditures of 53 million dollars in
1 95 1 for construction of public buildings,
more than half is for acquiring sites and
drawing plans for future construction in ac-
cordance with the Public Buildings Act of
1949. Expenditures for actual construction
will be limited to projects already under way.

Operation of the Weather Bureau, —
Modest increases are requested to meet the
increased demand for the services of the
Weather Bureau. These include the require-
ments for general weather service, aviation
forecasts, and assisting in the protection of
our forests from fire hazards. Increases in
Adantic weather patrol observations and in
forecasting and briefing services to pilots
on international flights are to meet commit-
ments under the International Civil Avia-
tion Organization.

Government of Guam, Samoa, and the
trust territory of the Pacific islands. — It is
the announced aim of this Government to
accord civil government to the inhabitants
of its non-self-governing Pacific Territories —
Guam and American Samoa — ^which have
been under American rule for half a cen-
tury, and the trust territory of the Pacific
islands which we administer under a
United Nations trusteeship agreement. As a
partial step in this direction I have trans-
ferred administrative responsibility for
Guam to the Secretary of the Interior and
have directed that arrangements be made for
a similar transfer on July i, 1951, with respect
to American Samoa and the trust territory.
This Budget includes 2 million dollars
for Guam as part of a 4 million dollar
appropriation recommended for admin-
istration of Territories and possessions for
the fiscal year 1951. I urge that the Con-
gress enact the proposed organic acts now be-
fore it, providing for the civil government

of Guam and American Samoa, and similar
legislation for the trust territory of the Pa-
cific islands.

Development of the National Capital. —
I renew my request that the National Capital
Park and Planning Commission be estab-
lished on a stronger statutory basis. This
would enable the Commission to fulfill more
effectively its obligations to plan the orderly,
coordinated development of the District of
Columbia and nearby areas in Maryland and
Virginia.

Government Services Corporation. — Sev-
eral organizations not within the normal
governmental framework now provide, in
Government buildings and on Government
property, cafeteria and recreational services
for Federal employees. I recommend that
the Congress pass legislation now before it
to create a self-supporting Government cor-
poration to carry out these essentially gov-
ernmental responsibilities.

Federal employees* unemployment com-
pensation. — ^The proposed broadening of the
coverage of the unemployment compensa-
tion program, recommended elsewhere in
this Message, requires a Government pay-
ment to extend coverage to Federal em-
ployees. This Budget includes 13.5 million
dollars for an appropriation to cover benefit
payments in the second half of fiscal year
1 95 1, when it is anticipated the program will
be in operation.

Civil rights program. — This Budget in-
cludes funds to expand civil rights enforce-
ment activities of the Department of Jus-
tice under present laws. In addition to
the amount provided for establishing a Fair
Employment Practice Commission, there is
included 800 thousand dollars as the amount
needed under proposed legislation to estab-
lish a permanent Commission on Civil
Rights, which would continuously review
our practices and policies in this field, and
to provide for an additional Assistant At-

102

Harry S. Truman, ig^o

Jan. 9 [9]

Treasury Department

Interest ON the Public Debt

[ Fiscal years. In millions ]

Appropria-
tions for

Expenditures

I9SI {per-

1949

1950 1951

manent

Agency

actual

estimated estimated

indefinite)

$5, 352

$5, 725 $5, 625

$5, 625

torney General to supervise a needed civil
rights division in the Department of Justice.

Interest on the Public Debt

Interest on the public debt is a fixed obli-
gation of the Government, determined by
the amount of Federal securities outstanding
and their interest rates. Payments are fi-
nanced by permanent indefinite appropria-
tions which do not require annual congres-
sional action.

Interest payments of 5.6 billion dollars
estimated for 1951 are lower than those in
1950, because a shift in reporting methods
caused a nonrecurring addition of over 200
million dollars in 1950. Under the new
method, effective in the fiscal year 1950, all
interest payments are now reported as they
become payable rather than when they are
actually paid. As a result of the transition,
the 1950 total includes interest for prior
years that was payable but had not yet been
presented for payment at the beginning of
the fiscal year 1950. This change does not
significantly affect the reporting of interest
payments in 195 1 and later years.

Apart from this nonrecurring item, total
interest payments will continue to rise in the
fiscal year 1951. Each year more of the
savings bonds sold during the war reach the
stage where interest accrues at higher rates.
Moreover, continuing accumulations of Gov-
ernment trust funds will cause further in-
creases in special issues to such funds of
obligations bearing rates of interest higher
than the average on the entire public debt.

Finally, the Budget deficits this year and
next will add to the total volume of interest-
bearing debt. Savings in refunding opera-
tions, however, will offset some of this in-
crease in interest cost.

Interest payments on the Federal debt are
widely distributed, and represent a partic-
ularly important source of income to certain
institutions and groups. Almost 2 billion
dollars of interest in the fiscal year 1951 is
expected to go to individuals and unincor-
porated businesses. About i billion dollars
will be paid to commercial banks and almost
1.5 billion to insurance companies, mutual
savings banks, and other private investors.
Another i billion dollars will go to Govern-
ment retirement funds, social security funds,
and various other Government trust funds
to build up reserves out of which future
benefits will be paid. Over 250 million
dollars of interest in 195 1 will be paid to
the Federal Reserve banks; more than half
of such payments will be returned to the
Treasury and deposited into miscellaneous
receipts. The remainder will be used to
defray most of the operating expenses of the
Federal Reserve System, to pay dividends to
member banks, and to add to surplus.

PROPOSED LEGISLATION— A
SUMMARY

The following table shows estimated ex-
penditures, appropriations, and other au-
thorizations included in the Budget for
programs under proposed legislation. The
second table shows the effect of proposed

103

[9] Jan. 9

Public Papers of the Presidents

Proposed Legislation

{Summary of amounts included in the Budget)

[ Fiscal years. In millions ]

Function and program

EXTENSION OF EXISTING LEGISLATION

International affairs and finance:

Extension of European recovery program and other foreign aid.

Extension of mutual defense assistance

Estimated

expenditures,

1951

$1, 700.

Anticipated supplemental
appropriations and other
authorizations

Inter-American highways

National defense: Selective service program

Housing and community development:

Mortgage purchases

Loans to pref abricators

Extension and modification of loan insurance

Agriculture and agricultural resources: Commodity Credit Corpora-
tion

Transportation and communication:

Federal-aid postvj^ar highway program

Forest highways

Finance, commerce, and industry:

Business loans and guarantees

Extension of rent control

10. o
15.0

Expenditures and appropriations (net) 2, 059. o

Contract authorizations

Public debt authorizations

NEW LEGISLATION ===

International affairs and finance:

Technical assistance to economically underdeveloped areas (Point

IV) 25.

Assistance to the Republic of Korea 110. o

Contributions to International Trade Organization and other in-
ternational organizations 2. 5

Relief of Palestine refugees 20. o

Expanded displaced persons program 2. 4

Rama Road, Nicaragua

National defense: Military functions (including public works) .

Social welfare, health, and security:

Expansion of public assistance programs

Expansion of vocational rehabilitation program

Aid to medical education

Increased aid to local public health services

Increased grants to States for maternal and child welfare . . . .
Health services for school children

70.0

200. 3

4.3
30.0

4.5

6.9

25.

1950

3.9

125.0

($500. 0)

17.8

(25.0)

-12.7

(2, 000. o)

(2, 525. 0)

65.0

27.0

I95I

$3, 100. o

647.5

[500. 0]

[8.0]

4.2

(250. o)

[500. o]
[20.0]

(250. 0)

16.0

3, 767. 7
[1,028.0]
(500. 0)

35-0
115. o

2.5

2.6
[8.0]

131. 7
[240. 0]

250.3

4-3

45.0

5.0

9.5
35.0

Note. — [ ] indicate contract authorizations. ( ) indicate public debt authorizations.

104

Harry S. Truman, ig^o

Proposed Legislation — Continued
[ Fiscal years. In millions ]

Jan. 9 [9]

Function and program
New Legislation — Continued
Housing and community development:

Cooperative housing for middle-income families

Loans to other cooperatives

Home Loan Bank Board stand-by borrowing authority

Disaster relief

Education and general research:

General aid for operating expenses, elementary and secondary
schools

Surveys and emergency construction, elementary and secondary
schools

Education of children on Federal properties and in emergency
areas

General assistance to college students

National Science Foundation

Agriculture and agricultural resources: Administration of Commodity

Exchange Act

Natural resources:

Research in utilization of salt water

Baltimore- Washington Parkway

Transportation and communication:

Inland Waterways Corporation

St. Lawrence seaway and power project

Construction of public airports, Territory of Alaska

Forest highways, Alaska

Estimated

expenditures,

1951

Anticipated supplemental
appropriations and other
authorizations

1950

Postal rate increase (increased revenue)

Labor:

Expanded unemployment insurance: Administration and reinsur-
ance

Industrial safety program

Fair Employment Practice Commission

General government:

Strengthening Federal civil rights program

Unemployment compensation payments to Federal workers

$50.0
30.0

5.0

290.2

22. 2

7.0
0.9
0.4

0.7

0.5
2.0

3.0
4.0
3.5
2.9
-395.

12.4
6.0
0.6

0.7
13.4

561.3

($1,750.0)

4.5

96.5

Expenditures and appropriations (net)

Contract authorizations

Public debt authorizations (i, 750. 0)

* Estimated additional receipts of 60 million dollars in 1951.

Note. — [ ] indicate contract authorizations. ( ) indicate public debt authorizations.

1951

$35.0
(25. 0)

5.0

300.2

45.2

7.0
I.
0.5

0.8

0.5
3.0

3.0
6.0

2.9

[4.4]
-395. o

12.5
6.0
0.7

0.8
13.5

684.5

[252. 4]

(25. 0)

105

[9] Jan. 9 Public Papers of the Presidents

Proposed Legislation Affecting Trust Funds
[ In millions ]

Function and program estimated

social welfare, health, and security
Extend and improve old-age and survivors insurance:

Additional receipts Ii^ 200.

Additional disbursements i^ 43,3.

Net accumulation in reserve — 233.

Medical care insurance:

Receipts 250.

Disbursements for initial expenses 35.0

Net accumulation in reserve, 215.

legislation upon the Government trust funds.

Many of the programs listed under pro-
posed legislation are actually continuations
of programs already in existence but for
which new authorizations are required to
permit their continuance in 1951. These
items are set forth separately in the first part
of the table.

The Budget also contains a general reserve
for contingencies. It is designed as a mini-
mum provision for activities not now
definitely foreseen, but on which action may
be required before the end of the fiscal
year.

The Budget for the fiscal year 195 1 reflects
the great strength and the extensive respon-
sibilities of this country. It represents much
more than a collection of facts and figures —
it represents the program which I am recom-
mending for our Government in the months
ahead. It will influence the course of events
for years beyond 195 1, and the success with
which we push ahead toward enduring
peace, continuing economic growth, and a
steady strengthening of our democratic
society.

In preparing this Budget, I have earnestly
applied the fundamental principles which, in
the present circumstances, should guide us

in the conduct of our affairs. It is an honest
Budget, which meets the realities which face
us. It provides for essential activities on a
minimum basis and no more, despite the
great pressures which exist on every side
for larger expenditures on specific programs.
It meets the obligation of our Government
to nourish and support the economic and
social health of our Nation. It not only
provides for substantial progress in 195 1
toward our goal of budgetary balance but
also lays the basis for further improvement
in subsequent years consistent with the wel-
fare of the country.

We are still a young and growing Nation
with a great reserve of human skills and
productive resources. We have made and
shall make more progress toward a less
threatening world. Our strength is not be-
ing impaired by our present great responsi-
bilities and the temporary deficits required to
meet them. Given wise policies, which meet
the broadest tests of national welfare, we can
look forward to the future with confidence.

Harry S. Truman.

note: The message was transmitted to the Senate
and to the House of Representatives on January 9.

The message and the budget document (1,198
pp.) are published in House Document 405 (8ist
Cong., 2d sess.).

106

Harry S. Truman, igp

Jan. 12 [ii]

10 Letter to the U.S. Representative on the United Nations
Commission on the Status of Women. January lo, 1950

My dear Judge Kenyan:

I want to express my appreciation of your
service as United States Representative on
the Commission on the Status of Women of
the Economic and Social Council of the
United Nations during the past three years.
I have been especially interested in the work
of this Commission, for it is my belief, as I
know it is yours, that the sound conduct of
public business requires the full participa-
tion of all citizens, men and women alike.
The Commission has benefited by your prac-
tical experience as a member of the Bar,
especially in these first years of organization
and planning. Your earlier service as an
expert member of the League of Nations'
Committee on the Legal Status of Women
and in regard to the nationality problems of
married women have also been an asset in
selecting fields for action and evaluating
results.

I am well aware that you have carried the

work of this Commission at a great sacrifice
to your heavy law practice. I know, too,
that you have given generously of your time
to counsel with other members of the Com-
mission and with the staS of the United
Nations concerned with the Commission's
objectives, as well as to interpret its progress
to organizations and individuals throughout
the United States. I hope that even though
your term of office has expired, we may call
on you from time to time for consultation on
the numerous technical problems which
arise in working to achieve equality for
women in all countries.

Very sincerely yours,

Harry S. Truman.

[Honorable Dorothy Kenyon, 50 Broadway, New
York 4, N.Y.]

note: Judge Kenyon was the first U.S. Representa-
tive on the United Nations Conimission on the
Status of Women. Appointed on November 7, 1946,
her term expired on December 31, 1949.

1 1 The President's News Conference of
January 12, 1950

THE PRESIDENT. I have uo announcements
today. I will try to answer questions, i£
anybody has any on his mind.

[i.] Q. Mr. President, have you reached
any new decision on whether there is an
emergency in coal that would warrant use of
the Taft-Hardey Act.?

THE PRESIDENT. There is no national emer-
gency in coal at the present minute.

[2.] Q. When is your tax program going
up?

THE PRESIDENT. Just as soou as we can get
it ready.

Q. Have you got anything you can tell us
about now.f*

THE PRESIDENT. No. It will all be con-
tained in the message, and it will be very
fairly stated.

Q. Will it go up next week, Mr. Presi-
dent.?

THE PRESIDENT. I hopC SO.^

[3.] Q. Mr. President, the Attorney
General is calling a conference on law en-
forcement, and there has been some talk
about getting an antiracketeering law against
these "tygoons." Do you have any comment
to make on that, sir?

THE PRESIDENT. No commeut. I imagine
that is what he has called the conference for,

^ See Item 18.

107

[ii] Jan. 12

Public Papers of the Presidents

to come to a conclusion on it.

[4.] Q. Mr. President, Senator Taft said
in the Senate yesterday that Formosa is one
place where, quote: "With a small amount
of aid and at very small cost, we could
prevent the spread of communism."^ Do
you agree with that?

THE PRESIDENT. Senator Taft is entitled to
his own opinion. I didn't know he was a
military expert, though. [Laughter]

[5.] Q. Mr. President, do you plan to
see the Governor of Puerto Rico when he
comes here in the near future?

THE PRESIDENT. Whenever the Governor
of Puerto Rico is here and wants to see me,
the door is always open to him, or the
Governor of any other one of the Territories.
I saw one this morning.

[6.] Q. Mr. President, do you plan to
change the Minister to Ireland ?

THE PRESIDENT. Hadn't heard anything
about it. I will certainly have to make the
appointment if there is a change.

[7.] Q. Mr. President, was that the Gov-
ernor of Alaska that was here?

THE PRESIDENT. The Govemor of Hawaii.
The Alaskan Governor was here last week,
I think.

[8.] Q. Mr. President, did Mr. Aldrich
make any suggestions for implementing
point 4?

THE PRESIDENT. We had a discussion on
the subject, and there will be an announce-
ment on it some time in the near future.^

[9.] Q. Mr. President, do you expect to
have an announcement soon on the new
member of the National Labor Relations
Board?

* The remarks of Senator Robert A. Taft are pub-
lished in the Congressional Record (vol. 96, p. 298).

^ Winthrop Aldrich, chairman of the board of the
Chase National Bank of New York. In the spring
of 1950 Mr. Aldrich, during a trip abroad, made a
survey of economic conditions in a number of Euro-
pean countries. On July 6, 1950, he reported his
findings in a meeting with President Truman.

THE PRESIDENT. YeS, I hopC tO.

Q. This week?

THE PRESIDENT. I Can't auswer it definitely.

[10.] Q. Mr. President, have you no-
ticed the close parallel between your budget
and the CED budget

Q. I didn't get that, Mr. President.

THE PRESIDENT. Say that again. I didn't
hear it, either.

Q. Have you noticed the close parallel be-
tween your budget and the CED budget,
which on the surface looks like it's a big one
but actually figures out very close to your
budget?

THE PRESIDENT. I haveu't giveu any study
to any budget but my own, and it's all I can
do to take care of that. I haven't seen the
CED budget.^

[11.] Q. Mr. President, is there any new
policy in the making on Spain? I notice
Chairman Kee ^ made a speech

THE PRESIDENT. I havc uo commeut on
that.

[12.] Q. Mr. President, would you give
us your reaction to Mr. Boyle's ^ report on
Ohio?

THE PRESIDENT. Very satisfactory report
from the Democratic standpoint.

Q. Did he report, Mr. President, that he
thinks the Democrats can beat Taft?

THE PRESIDENT. He reported to me he
thought the Democrats could win in Ohio.
No personalities were gone into. [Laugh-
ter]

Q. Do you think he might have meant
Senator Taft? [More laughter]

*The Committee for Economic Development, a
private nonprofit organization, released a report on
January 7, entitled "Tax Expenditure Policy for
1950," which called for a reduction in taxes and
Federal spending in fiscal year 195 1 (Committee for
Economic Development, 1950, 54 pp.).

^ Representative John Kee of West Virginia. His
remarks on Spain are published in the Congressional
Record (vol. 96, p. 240).

^ William M. Boyle, Jr., Chairman of the Demo-
cratic National Committee.

108

Harry S. Truman, ig^o

Jan. 12 [12]

[13.] Q. Mr. President, the House Rules
Committee is taking up FEPC tomorrow.
Is that being done at your request?

THE PRESIDENT. The House Rules Com-
mittee, of course, is running its own busi-
ness. The chairman of the Rules Com-
mittee was in to see me this morning, and
told me that they were going to take it up,
and I was very highly appreciative that they
are.

Q. Thank you.

Q. Do you think you can pass it this ses-
sion, sir?

THE PRESIDENT. Well, you will have to ask
the leaders in the House. I can't answer that
question.

Q. Not the House; it's the Senate.

THE PRESIDENT. Well, the Senate, then.

[14.] Q. Mr. President, going back to
Mr. Brandt's '^ question on Kee's speech, do
you know whether that had the approval of
the State Department, sir?

THE PRESIDENT. I think the best way to find
out is to ask the Secretary of State. I think
he has a press conference each week, just like
I do.

Q. Not this week, he says.

THE PRESIDENT. I think he had his press

"^Raymond P. Brandt of the St. Louis Post-Dis-
patch.

conference down at the Press Club today .^

[15.] Q. Mr. President, after Senator
Ferguson saw you the other day, he said he
had a feeling that the Formosa subject was
not closed, that there is a possibility perhaps
of allowing them to hire military experts?

THE PRESIDENT. I think that if you will
read my statement on Formosa, it is thor-
oughly and completely covered.^

Q. I did. Does that setde

THE PRESIDENT. That scttlcs the question,
so far as I am concerned.

[16.] Q. Mr. President, is there any new
plan of economic aid for southeast Asia in
the works — in the making?

THE PRESIDENT. No UCW plaUS, UO.

Q. Is there anything you could tell us
about economic aid to southeast Asia?

THE PRESIDENT. No, I have no statement to
make on it.

Reporter: Thank you, Mr. President.

THE PRESIDENT. You're wclcome.

note: President Truman's two hundred and twelfth
news conference was held in his office at the White
House at 4 p.m. on Thursday, January 12, 1950.

® Secretary Acheson's remarks at the Press Club on
January 12 were directed to an examination of U.S.
policy in Asia. He did not discuss Spain (see De-
partment of State Bulletin, vol. 22, pp. 111-118).
However, on January 18 Secretary Acheson re-
viewed U.S. policy toward Spain in a letter to Sena-
tor Tom Connally, Chairman of the Senate Foreign
Relations Committee (ibid., p. 156).

* See Item 3[i].

12 Remarks at a Supper for Democratic Senators and
Representatives. January 12, 1950

Mr, Chairman, Mr. Vice President, Mr,
Spea\er, and fellow Democrats:

It is a very great pleasure for me to be
here again on this occasion. I was here last
year and discussed with you certain experi-
ences of mine as a Member of the Senate of
the United States, and the difficulties I had
had in being elected at various times — in

1934, 194O5 1944, and I think I said some-
thing about the election of 1948.

But you have heard excellent advice from
the Speaker of the House, and from the Vice
President. And I hope that all of you will
remember that the Democratic Party is the
party of the people of the United States, and
has been ever since Thomas Jeilerson.

109

[i2] Jan. 12

Public Papers of the Presidents

The president of Princeton University was
in to see me yesterday, and told me that
Princeton is pubUshing all the writings of
Thomas Jefferson, and that there will be 51
volumes of it, and that they have been to
France, and to England, and to the Library
of Congress, and to various places in the
United States. They have found a letter
down in Oklahoma from Thomas Jefferson
to the Cherokee Indians, which is a classic.
They are going to publish all those writings
of Jefferson, and I hope someday somebody
will publish all the writings of Jackson, and
of Lincoln, and of Woodrow Wilson, and of
Franklin D. Roosevelt in that same way in
which Princeton is working on the writings
of Jefferson.

If they do that, they will find out why the
Democratic Party never dies. It is the party
of the people!

Now, the Democratic Party has a program.
You were all at Philadelphia, and you know
what that program is. I believe that a party
platform means what it says, and I am doing
everything I can to carry out the platform of
the Democratic Party of the United States,
and I am going to keep fighting for that as
long as I live.

It has been a pleasure to be here with you
tonight. It has been a pleasure to listen to
Sam Rayburn, who has been a friend of
mine ever since I have been in Washington,
and to listen to my boss here, the Vice Presi-
dent of the United States. He used to be
the leader in the Senate, and as he said, I
don't think he ever had to call on me or look
around to find out whether I was going to
support him as leader of the Senate.

And I hope that the Democrats in the
Senate of the United States will do that same
thing for my friend Scott Lucas.

I can't thank you enough for asking me
to come here, and I hope that next year,
after these fall elections, that we will have
a Democratic Party that represents the people
of the United States, in the House of Repre-
sentatives and in the Senate — and you will
have it in the Executive Office.

Thank you very much.

note: The President spoke at 8:30 p.m. at the Shore-
ham Hotel in Washington. In his opening words
he referred to William M. Boyle, Jr., Chairman of
the Democratic National Committee, Alben W.
Barkley, Vice President of the United States, and
Sam Rayburn, Speaker of the House of Representa-
tives. Later in his remarks the President referred
to Scott Lucas, Democratic Senator from Illinois
and Senate majority leader.

Special Message to the Congress on Synthetic Rubber.
January 165 1950

[ Released January 16, 1950. Dated January 14, 1950 ]

To the Congress of the United States:

The tremendous increase in the use of
rubber is one of the outstanding features of
our industrial development in the last 50
years. Rubber has become indispensable to
the United States, in both peace and v^ar.
Yet, 10 years ago this country w^as dependent
for practically all of its supply of this essen-
tial material on areas halfway around the
world. Early in World War II these areas
were lost, and it became necessary to develop

a domestic source of rubber. The creation,
in the midst of war, of a new industry ca-
pable of supplying a million tons of synthetic
rubber a year was one of the great achieve-
ments of our war effort.

Since the war, the sources of natural rub-
ber have again become available to us, and
production has increased as the destruction
and dislocations of war have been overcome.
At the same time, the world demand for
rubber has risen so far above the prewar

1 10

Harry S. Truman, ig^o

Jan. i6 [13]

levels that the supply of natural rubber is
still less than demand. Thus, continued
production of synthetic rubber in this coun-
try has prevented a serious w^orld rubber
shortage.

Facilities for producing general-purpose
synthetic rubber, commonly called GR-S,
are owned by the Government, as arc the
plants for producing butyl, the type of syn-
thetic rubber used primarily in inner tubes.
Facilities for producing other types of syn-
thetic rubber are now^ all privately owned.
In 1949 about 289,000 long tons of GR-S
and 52,000 long tons of butyl were produced
by the Government. In addition, about
53,000 long tons of other synthetic rubbers
were produced in privately owned plants.

It is essential to our national security that
facilities to produce enough high-quality
synthetic rubber to meet our needs in an
emergency be continuously available. We
must build up a stockpile of natural rubber,
and we have been doing so, but the ac-
cumulation of a stockpile large enough to
meet all emergency needs for rubber is im-
practical. We must be equipped to meet
the bulk of our needs from domestically
produced rubber.

The Government's synthetic rubber ac-
tivities are now conducted under the Rubber
Act of 1948, which expires on June 30, 1950.
This legislation provides that capacity for
production of synthetic rubber shall be main-
tained in the United States at all times, and
requires that minimum quantities shall be
produced and consumed each year. It pro-
vides authority for continued Government
production of synthetic rubber, for regula-
tions requiring its consumption in certain
products, for stand-by maintenance of plants
not in operation, and for continued Govern-
ment research in synthetic rubber. Al-
though the act prohibits the disposal of the
facilities in the synthetic rubber program, it
declares it to be the policy of the Congress

that Government ownership shall terminate
whenever consistent with national security.
The act provides that on or before January
15, 1950, the President shall recommend to
the Congress "legislation with respect to dis-
posal of Government-owned rubber-pro-
ducing facilities . . . together with such
other recommendations as he deems desirable
and appropriate."

As a basis for making recommendations
to the Congress, I have had made a thorough
investigation of all aspects of the rubber
problem. A report summarizing the results
of this investigation is transmitted to the
Congress with this message. The detailed
recommendations in that report have my
approval.

The rubber policy of the United States
should be based upon the fundamental na-
tional objectives of protection of the national
security, promotion of a free competitive
economy, and achievement of a peaceful and
prosperous world. I recommend that legis-
lation succeeding the Rubber Act of 1948
be enacted, setting forth this rubber policy,
and providing for continuation of the syn-
thetic rubber industry in a manner consistent
with these objectives.

In order to maintain the productive capac-
ity needed in the event of emergency, the
President should have the authority to desig-
nate the plants which must be kept available
at all times for synthetic rubber production.
On the basis of present technology and esti-
mated requirements, it appears that our
present plant capacity of nearly a million tons
a year should be maintained to be prepared
to meet emergency needs for synthetic rub-
ber. It is not necessary, however, that all
this capacity be in operation. Maintenance
in a stand-by condition of those plants which
are not being used should, therefore, be
authorized.

In order to encourage technological devel-
opment in the production and use of syn-

III

[i3] Jan. i6

Public Papers of the Presidents

thetic rubber and to provide a basis for rapid
expansion of production if this proves nec-
essary, at least a minimum quantity of each
type of synthetic rubber must be produced
and consumed. Certain types of synthetic
rubber, v^^hich are privately manufactured,
have established a sufficiently strong position
in the competitive market to assure a con-
tinuing demand for them. Recent improve-
ments in butyl rubber, w^hich is produced
only in Government-ov^ned plants, make it
superior to natural rubber for use in inner
tubes, its major use. It is probable, there-
fore, that as soon as private production of
butyl begins, this type of synthetic rubber
will be produced and consumed in adequate
volume in a competitive market. Until
butyl is privately produced, however, the
President should have the authority to deter-
mine the minimum quantities of butyl which
must be produced and consumed, and to
the extent necessary to require its use in
specified products.

The situation with respect to general-pur-
pose synthetic rubber (GR-S) is not quite
so favorable. Since it is not yet a satisfactory
substitute for natural rubber in all of the
products for which it would be used in an
emergency, it is desirable that the Govern-
ment's authority to conduct research in this
field continue. The physical properties of
GR-S have been steadily improved in recent
years, and at present the quality differences
between GR-S and natural rubber for peace-
time general-purpose uses (chiefly passenger-
car tires) are not significant. Price differ-
entials are likely to be the determining factor
in the choice between the two rubbers for
most uses. It is very possible that for some
time to come a considerable volume of GR-S
production will be required, since the supply
of natural rubber is not likely to be sufficient
to meet world market demand. This possi-
bility, however, is not an adequately depend-

able base for national security planning.

I believe that, at the present time, at least
one-quarter of total consumption of GR-S
and natural rubber, and not less than 200,000
long tons annually, should be GR-S. How-
ever, the needed level of production and
consumption may change over the next few
years wdth changes in world conditions.
Therefore, the President should be given the
authority to establish from time to time the
minimum level of production and consump-
tion necessary to the national security.

The present technological position of gen-
eral-purpose synthetic rubber is such that
it probably could not compete for bulk uses
with natural rubber offered at significandy
lower prices. There is thus no adequate
assurance that the demand for GR-S either
because of the possible shortage of natural
rubber or because of its technological quali-
ties, will be sufficient to insure production
and consumption at levels necessary for na-
tional security. The President should, there-
fore, have authority to require the use of
GR-S in certain products to the extent nec-
essary to assure such production and con-
sumption.

The minimum level of production and
consumption should not be higher than the
national security requires, for if it were, it
would unduly prevent consumers in this
country from realizing the benefits of mai'ket
competition, and interfere with our objec-
tives of expanding world trade and world
prosperity.

It is my earnest hope that controls on con-
sumption of GR-S may be reduced or sus-
pended over the next few years, as tech-
nological improvements result in increasing
quantities of general-purpose synthetic rub-
ber being consumed without Government
support. This development should be stim-
ulated by the disposal of the Government's
plants to private owners.

112

Harry S. Truman, ig^o

Jan. i6 [14]

The President should be authorized to dis-
pose of the synthetic rubber facilities to pri-
vate owners, under conditions which will
protect the national security and promote
effective competition.

The disposal of these plants while pro-
moting effective competition will present
many difficult problems. The plants are
large and involve large-scale operations.
Furthermore, only a few plants are required
to meet the probable demand for both re-
quired and anticipated voluntary consump-
tion of synthetic rubber. The legislation
authorizing disposal should take account of
these facts, and provide specific standards
designed to assure that the disposal program
will actively promote effective competition
and avoid monopolistic concentration.

A special problem will arise when general-
purpose synthetic rubber plants are privately
owned, if the Government continues to re-
quire the use of synthetic rubber in certain
products. In this situation, the Government
must see that synthetic rubber is made avail-
able on fair and reasonable terms and con-
ditions to those required to use it. Such
Government intervention in the normal
buyer-seller relationship will present diffi-
cult practical problems for both industry and
Government. Development of a vigorous

private synthetic rubber industry, however,
may soon result in adequate consumption of
synthetic rubber to permit removal of Gov-
ernment regulation.

I believe that the policies outlined in this
message and the detailed recommendations
contained in the accompanying report pro-
vide a sound program for action. For this
reason, the legislation establishing these
policies can be of relatively long duration.
Furthermore, a firmly established legislative
framework is highly desirable if disposal of
the Government's synthetic rubber plants is
to be successful. I recommend the adoption
of legislation of ten years duration in order
to provide adequate protection of the na-
tional security and to contribute to the de-
velopment of a vigorous, competitive, and
privately owned synthetic rubber industry
in the United States.

Harry S. Truman

note: a report by John R. Steelman, Assistant to
the President, entitled "A Report to the President on
the Maintenance of the Synthetic Rubber Industry in
the United States and Disposal of the Governnient-
Owned Synthetic Rubber Facilities," was trans-
mitted with the message (see House Document 448,
8 1 St Cong., 2d sess.).

On June 24, 1950, the President approved a bill
extending the Rubber Act of 1948 until June 30,
1952 (64 Stat. 256).

14 Remarks at a Dinner Given by the Chairmen and Directors
of Federal Reserve Banks. January i6, 1950

Mr. Chairman, gentlemen:

I haven't any business to be discussing
things financial with the financial brains
that are before me tonight. I am just a
farmer from Missouri who had bad luck
and got kicked into a big job. I was telling
the gentleman on my right here how that
came about, and I think he is still somewhat
skeptical.

But naturally I am, and always have been,
interested in the financial stability of govern-
ment, whether that government is village,
city, county, State, or national. I have spent
most of my time studying — since I have been
in politics, and that has been a long time —
fiscal policies of various segments of the
Government of the United States, which in
my opinion is the greatest Government that

113

[14] Jan. 16

Public Papers of the Presidents

the sun has ever shone upon, for the simple
reason that it is a Government of check and
balance. It is a Government that no one
man or any one group of men can control.
It is a Government that is intended to be in
the interests of all the people, and it is 150
million that make it up.

I had my first experience in government
fiscal matters as the presiding and executive
officer of a county of 500,000 people. And
the problems of that county of 500,000 peo-
ple wtxt just exactly parallel with the prob-
lems of 150 million. I had exactly the same
trouble w^ith the bankers that I have now.
And I had no difficulty in convincing them,
when I thought I was right and when I
proved to be right, that the right thing to
do was what they finally did.

I appreciate very much the kind remarks
that your Federal Reserve Chairman has
made about me. I hope that his compli-
ments and his good thoughts of me will
never have to be called back, because my
only interest, my only interest, as President
of the United States, is the welfare of the
United States of America. And the welfare
of the United States of America is the wel-
fare of the world.

Whether we like it or not, we are at the
top of the heap in world affairs, a position
which none of us likes to contemplate, a
position which has responsibilities almost too
big for any man or any group of men to
contemplate. Yet that position is ours.
And the fact that we are willing to assume
the responsibility that goes with that posi-
tion is a part of your responsibility, as well
as a part of the responsibility of the United
States Government, made up of its Congress,
its judiciary, and its President.

This is a serious age through which we
are going. This is the aftermath of the

greatest struggle in the history of the world
for free government. Never after a struggle
of anything like these proportions have we
had as many problems to face as we have
today.

They are the problems of every citizen of
the United States, from the taxicab driver
out here at the door to the president and
chairman of the board of the greatest bank
in the United States, as well as the problems
of the President of the United States who is
the elected official at the head of the Govern-
ment.

For that reason I came over here at Tom
McCabe's request to meet you and get
acquainted with you, and to let you know
that in spite of certain information, which
has been pretty well distributed, that I do not
wear horns and I haven't a tail — I am just an
ordinary citizen of this great Republic of
ours who has the greatest responsibility in
the world and whose responsibility is your
responsibility, and for that reason it is nec-
essary that all of us make every effort possible
to make successful the goal which we are
attempting to attain.

And that is peace in the world — peace in
Europe, peace in Asia, peace in South
America, peace in Africa, peace in the West-
ern Hemisphere, and the assumption of the
leadership necessary to bring that about.

Now gentlemen, you represent the great-
est financial institution in the history of the
world, except the Treasury of the United
States. And between the two of you, we can
attain this goal: world peace, world pros-
perity, and the welfare of all the people.

That is all I am striving for. That is what
I hope to have the country on the road to
accomplishing when my service as the head
of the greatest Government in the history of
the world ends.

114

Harry S. Truman, ig^o

Jan. 19 [16]

note: The President spoke at 9:20 p.m. at the
Carlton Hotel in Washington. His opening words
"Mr. Chairman" referred to Thomas B. McCabe,

Chairman of the Board of Governors of the Federal
Reserve System.

15 Remarks to a Delegation From the National Emergency Civil
Rights Mobilization Conference. January 17, 1950

YOU don't need to make that speech to me,
it needs to be made to Senators and Con-
gressmen. Every ejflort is being made by the
executive branch of the Government to get
action on these measures. I have been w^ork-
ing at them ever since I went to Congress.
I went there in 1935, and that is a long time
ago.

We have made some progress. We
haven't made enough. We hope to make
more. The passage of the resolution by the
Rules Committee of the House the other day
is a blow that is serious and backward-
looking. I am doing everything possible to
have that motion beaten when it comes up
for consideration on the floor of the House.
Every effort is being made to get a vote on
these measures in the Senate. The leader of
the majority and the Vice President have
assured me that they will eventually get a
vote, if it takes all summer.

I hope that when that vote is taken we will
be in a better position to understand who
our friends are, and who are not.

This is a serious situation. This civil
rights program, which I have sent to the

Congress on every occasion that it has been
possible to send it, is one that is necessary,
if we are going to maintain our leadership
in the world. We can't go on not doing the
things that we are asking other people to do
in the United Nations.

I hope all of you will continue your hard
work on the subject, and that you will make
it perfectly plain to the Senators and Con-
gressmen who represent your States and
districts that action is what we want; and
I think that is possibly the only way we can
get action.

I thank you very much.

note: The President spoke at 12:10 p.m. in his
office at the White House.

The National Emergency Civil Rights Mobiliza-
tion Conference, sponsored by 55 organizations inter-
ested in the promotion of civil rights, was held in
Washington January 15-17, 1950. The conference
had as its objective support for the President's civil
rights program and particularly for the fair employ-
ment practice bill.

The delegation that met v^^ith the President wsls
headed by Roy Wilkins, chairman of the conference
and acting secretary of the National Association for
the Advancement of Colored People. As Mr. Wil-
kins started to read a prepared statement he was
interrupted by the President.

16 The President's News Conference of
January 19, 1950

THE PRESIDENT. I have uo Special announce-
ments to make this morning, but I will try
to answer your questions if I can.

[i.] Q. Mr. President, do you plan to

name a successor to Myron Taylor .^^
THE PRESIDENT. The matter is under study.
Q. Does that go also, Mr. President, for

continuing the mission .^^

115

[i6] Jan. 19

Public Papers of the Presidents

THE PRESIDENT. It is undcf study, yes.^

Q. What was the answer, sir?

THE PRESIDENT. The matter is under study.
The State Department is studying it. I
think Dean Acheson answered that yester-
day.^

[2.] Q. Mr. President, has it been deter-
mined when the tax message will go up? ^

THE PRESIDENT. As quickly as it is ready.
It will go up in a few days. We have been
working very hard on it. No controversy.
It is a technical matter. Takes a litde time
to get it ready.

[3.] Q. Mr. President, do you plan to
fill the vacancy on the War Claims Commis-
sion any time soon, sir?

THE PRESIDENT. On what?

Q. The War Claims Commission. You
recall that one of the commissioners was

THE PRESIDENT. Oh yes, he was killed in
an airplane accident. Yes, we will fill that

* Myron C. Taylor was appointed as the Presi-
dent's Personal Representative at the Vatican on
December 23, 1939; his resignation became effec-
tive on January 18, 1950. His letter of resignation
and the President's reply, both dated January 18
and released by the White House on the same date,
are published in the Department of State Bulletin
(vol. 22, p. 181).

On October 20, 1951, the President appointed
Gen. Mark W. Clark to be the first U.S. Ambassador
to Vatican City. According to reports in the press
the White House reaffirmed the power of the Presi-
dent to establish diplomatic relations with the
Vatican without consulting Congress but announced
that the President would request congressional ap-
proval of the nomination.

After widespread controversy on the appointment
and protests from numerous Protestant groups, Gen-
eral Clark withdrew as the nominee on January 13,
1952. A U.S. Ambassador to Vatican City was
not appointed during the Truman administration.

^On January 18, 1950, Secretary Dean Acheson
sent a telegram to the American Embassy in Rome
concerning the office of the President's Personal
Representative at the Vatican. The text of the
telegram was not released.

^ See Item 18.

as promptly as we can.'*

[4.] Q. Mr. President, is Charles Luck-
man being persuaded to accept a Govern-
ment position?

THE PRESIDENT. Not that I kuow o£. I
haven't had any conversation with him on the
subject. All I know about what has hap-
pened is what I saw in the paper.

[5.] Q. Mr. President, are you consider-
ing direct negotiations with Russia on the
hydrogen bomb .f^

THE PRESIDENT. No.

Q. Mr. President, has David Lilienthal
offered to go to Russia on that subject .f*

THE PRESIDENT. No, he has not.

[6.] Q. Mr. President, the National
Lawyers Guild, I believe, has asked you to
investigate the FBI, I think, again. Have
you received any such request.?

THE PRESIDENT. We have received no
formal communication from the Lawyers
Guild.

Q. Nothing formal

THE PRESIDENT. We have received no
formal communication. I have heard lots
of rumors on the subject.

Q. Would you like to say something about
it.?

THE PRESIDENT. No, I have no comment.

Q. Mr. President, we didn't hear the
question, I'm sorry.

THE PRESIDENT. They Wanted to know if
the Lawyers Guild was going to ask me to
investigate the FBI, and I told him I hadn't
heard it officially.

[7.] Q. Mr. President, what did you see
Congressman Sabath about this morning.?

*On February 28, 1950, the President transmitted
to the Senate the nomination of Myron Wiener as a
member of the War Claims Commission. The ap-
pointment filled the vacancy created by the death of
David N. Lev^is on November 29, 1949, v^hen he
was killed in the crash of an airliner in Dallas, Tex.

116

Harry S. Truman, igp

Jan. 19 [16]

THE PRESIDENT. The proposcd change in
the rules of the House. He came up to
talk to me about it at my suggestion.^

Q. Are you against it? [Laughter]

THE PRESIDENT. Of couTse I am against it.
I hope they won't do it.

Q. Mr, President, he suggested he might
make a change himself, by way of appeasing
the southerners. Did he discuss that with
you?

THE PRESIDENT. I dou't know what that
change is. I didn't discuss that with him.
I told him I was opposed to the change.
Period.

Q. Was he optimistic about beating it?

THE PRESIDENT. He thought he could beat
it. That is the change.

Q. Mr. President, have you spoken to
Speaker Rayburn on this whole subject of
the rules change

THE PRESIDENT. Yes, I have — yes, I have.
I have talked to Speaker Rayburn every
Monday on the subject for the last year and
a half, and the year before that, also.

Q. I mean particularly this Monday, sir?
[Laughter]

THE PRESIDENT. Yes, we discussed it.

Q. Are you in agreement on it, Mr. Presi-
dent?

THE PRESIDENT. YeS.

[8.] Q. Mr. President, is there a nomina-
tion in sight for Alien Property Custodian?
THE PRESIDENT. I thought the Alien Prop-

" Representative Adolph J. Sabath of Illinois,
Chairman of the House Rules Committee. The
proposed change in the rules had to do with an
attempt to restore the power of the Committee to
pigeonhole bills. Under the rule in effect since
January 3, 1949, any bill held up by the Rules Com-
mittee for 21 days could be brought to the floor
at the call of the chairman of the committee of
original jurisdiction — ^provided the Speaker recog-
nized him for such a call. On January 20 the
House voted 236-183 to retain the 21 -day rule.

erty Custodian business was wound up.
Which is it? Maybe Fm mistaken — I was
thinking about surplus property. That is
about to wind up.

[9.] Q. Mr. President, were you able to
work out an agreement on the Missouri sen-
atorial primary with the Missouri politicians
this week?

THE PRESIDENT. I made a statement last
week in which I said that I was for Allison,^
and I think you will find the Missouri poli-
ticians generally in agreement with that.

Q. Generally in agreement?

THE PRESIDENT. Yes. [Laughter]

Q. Mr. President, does that mean that
these other men may withdraw?

THE PRESIDENT. I Can't auswer that ques-
tion. You see, Missouri has a free primary,
and anybody in the world can run that wants
to. There is nothing to prevent them —
nothing to prevent them trying it. I am
just answering your question.

[10.] Q. Mr. President, are your legal
advisers in agreement with Senator Taft,
who says that the Taft-Hardey Act oilers
no basis for Mr. Denham's action yester-
day against the ^

THE PRESIDENT. I Can't auswer that. Mr.
Denham is acting for the National Labor
Relations Board. He has a right to take
such steps as he thinks the law provides. He
has been in close touch with the White

•See Item 3 [8].

^On January 18, Robert N. Denham, General
Counsel, National Labor Relations Board, filed a peti-
tion in the Federal District Court to compel John L.
Lewis and the United Mine Workers of America
to restore normal coal production.

Denham based his petition on the section of the
Taft-Hardey law forbidding unfair labor practices.
According to the New York Times, Senator Robert
A. Taft of Ohio stated that he did not believe the
avenue of approach used by Mr. Denham would be a
suitable substitute for invocation of the national
emergency section of the Taft-Hartley Act.

117

[i6] Jan. 19

Public Papers of the Presidents

House, but the White House has had nothing
to do with his actions.

[11.] Q. Mr. President, do you favor
former Assistant Attorney General Alex
Campbell for nomination to the Senate in
Indiana?

THE PRESIDENT. I am not in the Indiana
senatorial primary. I am only in the Mis-
souri primary.

Q. Yes, sir.

THE PRESIDENT. After the primary is over
in Indiana I hope to help elect a Democratic
Senator from Indiana.

[12.] Q. Mr. President, getting back,
did you say that Missouri Democrats v^ere
in general agreement with you, or generally
in agreement with you? [Laughter^

THE PRESIDENT. Now, what do you mean
by that question? {More laughter] Are you
a lawyer? What do you mean by that ques-
tion? I think it means the same thing.

[13.] Q. Mr. President, it has been re-
ported in Chicago that come election time —
not primary time — that you will be making
one or more speeches in Illinois for Senator
Lucas?

THE PRESIDENT. We wiU cross that bridge
when we get to it. Of course, I want Sena-
tor Lucas to come back now, and I will do
everything I can to help him come back.
If it requires that, I will do it.

[14.] Q. May I go back to the Denham
matter a moment?

THE PRESIDENT. YeS.

Q. I understand he has a right to take
what action he thinks proper?

THE PRESIDENT. That is correct.

Q. Have you had communication with him
on the subject?

THE PRESIDENT. No. He was in communi-
cation with me. I had no communication
whatever. He told us what he was going
to do, and we listened.

[ 15.] Q. Mr. President, have you decided
on the successor to Mr. Lilienthal? ^

THE PRESIDENT. No, I havc not. I will
announce it whenever I am ready.

[16.] Q. Mr. President, is there anything
more you can tell us about the plans for the
leaders in the Senate to keep the Senate
through the summer if necessary to get a
civil rights vote?

THE PRESIDENT. No, I cau't commeut fur-
ther on that. I have said all that is necessary.

What is it somebody wants to ask me?

[17.] Q. Do you plan any further action
in the coal dispute?

THE PRESIDENT. I am in constant touch
with the situation in the coal industry.
When the situation develops to the point
where it is necessary for me to take action,
I will take it.

[18.] Q. Mr. President, do you have
under consideration the production of a
hydrogen bomb?

THE PRESIDENT. I caunot couimeut on
that.^

[19.] Q. Mr. President, you won't take
any part in the primary race in South Caro-
lina ?

THE PRESIDENT. I will take no part in any
primary race outside the State of Missouri,
That is my State, where I have the right to
do as I please. The other States have a right
to do as they please. After the primaries are
over, then I will be in a different frame of
mind.

[20.] Q. Has anybody discussed the
question of a formula by which you can go
to determine when there is and when there

®The resignation of Davil E. Lilienthal as Chair-
man of the Atomic Energy Commission became
effective on February 15, 1950. On February 16,
1950, the President designated Sumner T. Pike as
Acting Chairman of the Commission, and on July
II, 1950, Mr. Truman appointed Gordon E. Dean
to be Chairman of the Commission.

® See Item 26.

118

Harry S. Truman, ig^o

Jan. 19 [16]

is not a coal emergency, that is, when the
shortage is

THE PRESIDENT. The decision is in the
hands of the President, and when the Presi-
dent thinks there is an emergency, he will
declare it and take whatever action is neces-
sary.

Q. In other words, the emergency has not
arisen?

THE PRESIDENT. The emergency is not
here. The national emergency is not here.

Q. Mr. President, if things go on as they
are now, how long do you think it will be
before there would be a national emergency?

THE PRESIDENT. Your gucss is as good as
mine. I get constant reports on the situation.
When I think there is an emergency, I will
make a statement on it, and I think you will
understand it clearly.

Q. Does an emergency threaten, Mr.
President?

THE PRESIDENT. I don't carc to answer that
question. You will have to dig that up for
yourself.

Q. Has the Denham action your blessing,
Mr. President?

THE PRESIDENT. Mr. Dcuham is working
for the National Labor Relations Board, and
it is not my business to bless him or unbless
him. [Laughter]

Q. Mr. President, if there is no objection —
is there any connection between Mr. Den-
ham's action and the presence or the lack of
presence of a national emergency?

THE PRESIDENT. Noue that I know of.
None that I know of — no connection. Mr.
Denham was requested to take any action
ever since the 31st of December, and he has
generally decided to take it.

Q. It isn't really a national emergency?

THE PRESIDENT. No, uo. Has nothing to
do with a national emergency.

[21.] Q. Mr. President, you don't have

any comment on former Secretary Jimmy
Byrnes entering ^°

THE PRESIDENT. No, I have no comment.
Mr. Byrnes is a free agent to do as he damn
pleases. [Laughter]

Q. That's a good quote, Mr. President!
[Laughter]

[22.] Q. Mr. President, I want to ask
one question, because I know that every-
body wants it answered. Will there be any
change in the status of General Vaughan as
a result of the reports ^^

THE PRESIDENT. There will be none.

[23.] Q. On the subject of Mr. Denham,
Mr. President, have various calls which have
been sounded by individuals for the recall
of Mr. Denham been brought to your atten-
tion in any official

THE PRESIDENT. I have sccu them in the
paper, but nowhere else.

Q. Nowhere else?

THE PRESIDENT. Nowhere else but in the
paper. Like a lot of other guesses that get
into the papers. [Laughter]

Reporter: Thank you, Mr. President.

note: President Truman's two hundred and thir-
teenth news conference was held in his office at the
White House at 10:30 a.m. on Thursday, January
19, 1950.

" On January 14 James F. Byrnes, former Secretary
of State, announced that he would be a candidate
for the Democratic nomination as Governor of
South CaroUna.

^Maj. Gen. Harry H. Vaughn, Military Aide to
the President.

The report of the Investigations Subcommittee of
the Senate Committee on Expenditures in the Execu-
tive Departments, entided "The 5-Percenter Investi-
gation," was submitted to the Senate on January
18, 1950. It is published in Senate Report 1232
(8 1st Cong., 2d sess.).

The report dealt with the problem of "manage-
ment consultants," influence peddlers who sought
to convince the small businessman that their serv-
ices were needed in order to obtain Government
contracts.

119

[17] Jan. 21

Public Papers of the Presidents

17 Statement by the President on the Rejection by the House of
Representatives of the Korean Aid Bill. ]anuary 21, 1950

I AM releasing herewith a letter which I
have received from the Secretary of State
about the action of the House of Representa-
tives in rejecting the Korean aid bill on
Thursday by a vote of 193 to 191. I entirely
concur in the Secretary's views as to the
seriousness of this action and the necessity
for its speedy rectification. I shall take up
this matter with congressional leaders and
urge upon them the need for immediate
action, in order that important foreign
policy interests of this country may be prop-
erly safeguarded.

note: The letter of the Secretary of State, dated
January 20, follows:

"Dear Mr. President:

"The Department of State received with concern
and dismay the report that the House of Representa-
tives had rejected the Korean Aid Bill of 1949 by a
vote of 193 to 191. This action, if not quickly
repaired, will have the most far-reaching adverse
effects upon our foreign policy, not only in Korea
but in many other areas of the world. It has been
fundaniental to our policy that in those areas where
a reasonable amount of American aid can make the
difference between the maintenance of national inde-
pendence and its collapse under totalitarian pressure,
we should extend such aid within a prudent assess-
ment of our capabilities. The American people
understand this policy and have supported our ex-
tending aid in such circumstances; the success of
such aid is a matter of public record.

"The Republic of Korea owes its existence in
large measure to the United States, which freed the
country from Japanese control. The peoples of the
Republic of Korea, the other peoples of Asia, and
the members of the United Nations under whose
observation a government of the Republic was freely
elected, alike look to our conduct in Korea as a

measure of the seriousness of our concern with the
freedom and welfare of peoples maintaining their
independence in the face of great obstacles. We
have not only given the RepubUc of Korea inde-
pendence; since then we have provided the economic,
military, technical, and other assistance necessary
to its continued existence. Of the current program
of economic assistance we are extending to Korea,
half was provided by the Congress during the previ-
ous session. The withholding of the remainder
would bring our efforts to an end in mid-course.
It is our considered judgment that if our limited
assistance is continued the Republic will have a good
chance of survival as a free nation. Should such
further aid be denied, that chance may well be lost
and all our previous efforts perhaps prove to have
been vain.

"We are concerned not only about the conse-
quences of this abrupt about-face in Korea, whose
government and people have made valiant efforts to
win their independence and establish free institu-
tions under the most difficult circumstances, but we
are also deeply concerned by the effect which would
be created in other parts of the world where our
encouragement is a major element in the struggle
for freedom.

"It is difficult for us to believe that the Members
of the House of Representatives who voted against
this measure took sufficiently into account the serious
implications of this action upon the position of the
United States in the Far East. These implications
were set forth in considerable detail in hearings
before the committees of Congress by the Department
of State, Department of Defense and the Economic
Cooperation Administration.

"In our judgment it would be disastrous for the
foreign policy of the United States for us to con-
sider this action by the House of Representatives as
its last word on the matter.
"Faithfully yours,

"Dean Acheson"

On February 14, 1950, the President approved
the Far Eastern Economic Assistance Act of 1950
(64 Stat. 5).

18 Special Message to the Congress on Tax Policy.
January 23, 1950

To the Congress of the United States:

The tax policy of the United States Gov-
ernment is of major significance to the na-

tional welfare. Taxes are the means by
which our people pay for the activities of
the Government which are necessary to our

120

Harry S. Truman, ig^o

Jan. 23 [18]

survival and progress as a nation. Decisions
about Federal tax policy should be made in
full recognition of the economic and budg-
etary situation, and should contribute to our
national objectives of economic growth and
broader opportunity for all our citizens.

At the present time, I believe we should
make some revisions in our tax laws to
improve the fairness of the tax system, to
bring in some additional revenue, and to
strengthen our economy.

Our general objective should be a tax sys-
tem which will yield sufficient revenue in
times of high employment, production, and
national income to meet the necessary ex-
penditures of the Government and leave
some surplus for debt reduction. In the
Budget Message, I estimated that receipts in
the fiscal year 1951 will fall short of meeting
expenditures by 5.1 billion dollars. This
deficit will be due largely to the shortsighted
tax reduction enacted by the Eightieth Con-
gress, and to the present necessity for large
expenditures for national security and world
peace. Moreover, owing to the time lag be-
tween corporation earnings and tax pay-
ments, the 1949 decline in corporation profits
will be reflected in lower tax receipts in the
fiscal year 1951.

The policies I am recommending to the
Congress are designed to reduce the deficit
and bring about a budgetary balance as rap-
idly as we can safely do so. These policies
are threefold: first, to hold expenditures to
the lowest level consistent with the national
interest; second, to encourage and stimulate
business expansion which will result in more
revenue; and third, to make a number of
changes in the tax laws which will bring in
some net additional revenue and at the same
time improve the equity of our tax system.

First, as to Government expenditures.

I have recently transmitted to the Congress
a budget containing recommendations for
appropriations and estimates of expenditures

for the fiscal year 195 1. This budget was
carefully prepared with a view toward hold-
ing expenditures to the lowest possible levels
consistent with the requirements of national
security, world peace, economic growth, and
the well-being of our people.

The decisions of the Congress, as well as
unpredictable changes in circumstances over
the next eighteen months, may alter in many
particulars the character and amount of the
expenditures contemplated in this budget.
Nevertheless, I believe the estimates con-
tained in the budget represent the most
realistic appraisal that it is possible to make
at this time of the necessary expenditures in
1 95 1. I believe the Congress will generally
concur in this view after it has had an oppor-
tunity to consider these estimates carefully.

The expenditures estimated in the 1951
budget have been reduced by about 900 mil-
lion dollars below the level estimated for the
present fiscal year. The policies recom-
mended in the budget will permit further
reductions in subsequent years as the cost of
some of the extraordinary postwar programs
continue to decline.

To achieve these reductions we must con-
tinue to practice rigid economy. At the
same time, it would be self-defeating to
cripple activities which are essential to our
national strength. It will require wisdom
and courage to find and hold fast to the
course of wise economy without straying into
the field of foolish budget slashes.

Second, as to the strength and growth of
our national economy.

We cannot achieve and maintain a bal-
anced budget without a strong and prosper-
ous economy. A recession in economic ac-
tivity would call for increased Government
expenditures at the same time that revenues
were reduced, thus creating greater budget
deficits.

At the present time, the economy of the
United States is growing, and we have every

41-355—65-

-11

121

[i8] Jan. 23

Public Papers of the Presidents

reason to expect it to continue to expand if
we follow the right policies. It is largely
the task of private business to achieve this
growth. The Government, however, can
and should contribute to it. Through such
cooperation, national employment and in-
come will grow. This will result, in time,
in increasing Government revenues.

Just as the condition of our national econ-
omy has an overriding effect upon our efforts
to balance the budget, so do our policies for
managing the Federal budget have a deci-
sive effect upon the national economy.
Drastic reductions in Federal expenditures
in the wrong places and at the wrong time
could have serious disruptive effects through-
out our economy.

Government revenue policies are as im-
portant in our economy as Government ex-
penditure policies. Events of the last few
years have proved that our economy can
grow and prosper, and that employment,
production and incomes can increase, at the
same time that individuals and businesses
are paying taxes which are high by prewar
standards. However, taxes can and do have
an important effect upon business conditions
and economic activity. It should be our
constant objective to improve our tax system
so that the required revenues can be obtained
without impairing the private initiative and
enterprise essential to continued economic
growth.

We should always keep in mind that the
maintenance of a sound fiscal position on
the part of the Government is a long-range
matter. Nothing could be more foolhardy
than to attempt to bring about a balanced
budget in 195 1 by measures that would make
it impossible to maintain a balanced budget
in the following years.

Third, as to changes in the tax laws.

If, over the next few years, we hold ex-
penditures to the minimum necessary levels
and at the same time follow policies which

contribute to stable economic growth, we
can look forward to steady progress toward
a balanced budget. Nevertheless, we should
not rely only upon budgetary economy and
upon economic expansion to produce a bal-
anced budget. We should accelerate the
attainment of this objective by changes in
the tax laws. Drastic increases in tax rates,
just as in the case of drastic cuts in essential
expenditures, might prove to be self-defeat-
ing. Our primary objective should be to
improve and strengthen our revenue system
for the long run.

Under these circumstances, I am now rec-
ommending a number of important revisions
in our present tax system, to reduce present
inequities, to stimulate business activity, and
to yield about one billion dollars in net addi-
tional revenue.

In making changes in the tax laws, we
should be sure they move toward, and not
away from, the major principles of a good
tax system. Our tax structure should rec-
ognize differences in ability to pay; it should
provide incentives to new undertakings and
the expansion of existing businesses; it
should support the objective of increasing
opportunities for all our citizens to obtain a
better standard of living; and it should
rigidly exclude unfairness or favoritism.

Over the years, we have made important
progress in building a good tax system.
However, much remains to be done. There
is need further to improve the distribution
of the tax load to make it conform better
with tax paying ability. There is need to
reduce taxes which burden consumption
and handicap particular businesses. More-
over, we should eliminate tax loopholes
which enable some few to escape their share
of the cost of government at the expense of
the rest of the American people.

Many of the important and desirable tax
revisions which should be made must be
postponed until the budget situation im-

122

Harry S. Truman, ig^o

Jan. 23 [18]

proves. Nevertheless, a number of those
steps can and should be taken now.

First, I recommend that excise taxes be
reduced to the extent, and only to the extent,
that the resulting loss in revenue is replaced
by revenue obtained from closing loopholes
in the present tax lav^s.

The excise taxes are still at substantially
their wartime levels. Some are depressing
certain lines of business. Some burden con-
sumption and fall with particular weight on
low-income groups. Still others add to the
cost of living by increasing business costs.

Since we are limited in the amount of re-
duction we can now afford, we should choose
for reduction those taxes which have the
most undesirable effects. I believe that re-
ductions are most urgently needed in the
excise taxes on transportation of property,
transportation of persons, long-distance tele-
phone and telegraph communications, and
the entire group of retail excises, including
such items as toilet preparations, luggage,
and handbags.

If these revisions are made, we will have
reduced the most serious inequities of our
present excise taxes. We should go further
just as quickly as budgetary conditions per-
mit. At present, however, we should reduce
excises only to the extent that the loss in
revenue can be recouped by eliminating the
tax loopholes which now permit some groups
to escape their fair share of taxation.

The continued escape of privileged groups
from taxation violates the fundamental
democratic principle of fair treatment for
all, and undermines public confidence in the
tax system. While few of these loopholes
by themselves involve major revenue losses,
collectively they result in the loss of many
hundreds of millions of dollars every year.

I wish to call the attention of the Con-
gress to the more important of these loop-
holes. While some of them are of long
standing, their injustice has been aggravated

as the taxes assessed against the rest of the
population have been increased. A tax con-
cession to a favored few is always unfair,
but it becomes a gross injustice against the
rest of the population when tax rates are
high. The case for the elimination of these
inequities would be strong even if there were
no need for replacement revenue. It is com-
pelling when excise relief depends on it.

I know of no loophole in the tax laws so
inequitable as the excessive depletion ex-
emptions now enjoyed by oil and mining
interests.

Under these exemptions, large percentages
of the income from oil and mining properties
escape taxation, year after year. Owners of
mines and oil wells are permitted, after de-
ducting all costs of doing business, to exclude
from taxation on account of depletion as
much as half of their net income. In the
case of ordinary businesses, investment in
physical assets is recovered tax-free through
depreciation deductions. When the original
investment has been recovered, a deprecia-
tion deduction is no longer allowed under
the tax laws. In the case of oil and mining
businesses, however, the depletion exemption
goes on and on, year after year, even though
the original investment in the property has
already been recovered tax free, not once but
many times over.

Originally introduced as a moderate meas-
ure to stimulate essential production in the
first World War, this special treatment has
been extended during later years. At the
present time, these exemptions, together with
another preferential provision which per-
mits oil-well investment costs to be imme-
diately deducted from income regardless of
source, are allowing individuals to build up
vast fortunes, with litde more than token
contributions to tax revenues.

For example, during the five years 1943 to
1947, during which it was necessary to col-
lect an income tax from people earning less

123

[i8] Jan. 23

Public Papers of the Presidents

than $20 a week, one oil operator was able,
because of these loopholes, to develop prop-
erties yielding nearly $5,000,000 in a single
year without payment of any income tax.
In addition to escaping the payment of tax
on his large income from oil operations, he
was also able through the use of his oil tax
exemptions to escape payment of tax on
most of his income from other sources. For
the five years, his income taxes totaled less
than $100,000, although his income from
non-oil sources alone averaged almost
$1,000,000 each year.

This is a shocking example of how pres-
ent tax loopholes permit a few to gain enor-
mous wealth without paying their fair share
of taxes.

I am well aware that these tax privileges
arc sometimes defended on the grounds that
they encourage the production of strategic
minerals. It is true that we wish to encour-
age such production. But the tax bounties
distributed under present law bear only a
haphazard relationship to our real need for
proper incentives to encourage the explora-
tion, development and conservation of our
mineral resources. A forward-looking re-
sources program does not require that we
give hundreds of millions of dollars annually
in tax exemptions to a favored few at the
expense of the many.

Some tax loopholes have also been de-
veloped through the abuse of the tax exemp-
tion accorded educational and charitable
organizations. It has properly been the
policy of the Federal Government since the
beginning of the income tax to encourage
the development of these organizations.
That policy should not be changed. But the
few glaring abuses of the tax exemption
privilege should be stopped.

Responsible educational leaders share in
the concern about the fact that an exemption
intended to protect educational activities has
been misused in a few instances to gain com-

petitive advantage over private enterprise
through the conduct of business and indus-
trial operations entirely unrelated to educa-
tional activities.

There are also instances where the exemp-
tion accorded charitable trust funds has been
used as a cloak for speculative business ven-
tures, and the funds intended for charitable
purposes, buttressed by tax exemption, have
been used to acquire or retain control over
a wide variety of industrial enterprises.

These and other unintended advantages
can and should be removed without jeop-
ardizing the basic purposes of those orga-
nizations which should righdy be aided by
tax exemption.

A problem exists also with respect to life
insurance companies. The tax laws have
always accorded favorable treatment to the
income received by individuals from life
insurance policies and have made special
provision for the taxation of life insurance
companies. As a result of a quirk in the
present law, however, life insurance com-
panies have unintentionally been relieved of
income taxes since 1946. This anomalous
situation has meant that neither the com-
panies nor their policyholders have paid
taxes on more than 1.5 billion dollars of
investment income per year, derived from
productive assets worth about 60 billion
dollars.

I understand that the Committee on Ways
and Means of the House of Representatives
has already undertaken to correct this situa-
tion for the past years. I urge that steps also
be taken to develop a permanent system for
the taxation of life insurance companies
which will remove the inequities of under-
taxation in this field without impairing the
ability of individuals to acquire life insurance
protection.

In addition to the tax loopholes I have
described, there are a number of others
which also represent inequities, and should

124

Harry S. Truman, ig^o

Jan. 23 [18]

be closed. Most of these permit individuals,
by one device or another, to take unfair ad-
vantage of the difference between the tax
rates on ordinary income and the lower tax
rates on capital gains. As one example,
under present law producers of motion pic-
tures, and their star players, have attempted
to avoid taxes by creating temporary corpora-
tions which are dissolved after making one
film. By this device, their income from
making the film, which ought to be taxed
at the individual income tax rates, would be
taxed only at the capital gains rate. Thus,
they might escape as much as two-thirds of
the tax they should pay.

All these loopholes have been under joint
study by the Treasury Department and the
staff of the Congressional Joint Committee
on Internal Revenue Taxation. A practical
program which would go far toward closing
these loopholes can be enacted during the
present session of the Congress. This would
be a substantial step toward increasing the
fairness of our tax system, and should add
several hundred million dollars to its yield —
sufficient revenue to permit substantial excise
tax reduction where it is most urgently
needed.

I wish to make it very clear that I could
not approve excise tax reductions unless they
were accompanied by provision for replace-
ment of the revenue lost, because I am con-
vinced that sound fiscal policy will not
permit a weakening of our tax system at this
time. Under present conditions, we cannot
afford to reduce excise taxes first, in the
hope that action will be taken later to make
up for the loss in revenue.

Second, I recommend that the Congress
enact legislation to provide one billion dol-
lars in additional revenue, by revising and
improving the estate and gift tax and the
corporation tax laws. I believe that, under
present economic conditions, this amount of
additional revenue represents a proper bal-

ance between the objective of balancing the
budget as soon as possible and the objective
of coordinating tax adjustments with the
requirements of continued prosperity.

A substantial part of the additional rev-
enue should be obtained from revision of the
estate and gift tax laws.

The Revenue Act of 1948 reduced the
yield of the estate and gift taxes by one-third,
or nearly 300 million dollars. Even before
that Act, estate and gift tax yields were out
of line with other revenues, and that Act
made the situation worse.

In originally enacting the estate tax in
19 1 6, the Congress pointed out that "our
revenue system should be more evenly and
equitably balanced" and that a "larger por-
tion of our necessary revenues" should be
collected from the "inheritances of those
deriving most protection from the Govern-
ment." Our estate and gift tax laws at
present fall far short of this objective. They
now produce less than 2 per cent of internal
revenues, compared with 7 per cent ten years
ago. To the extent that these taxes remain
too low, the remainder of our tax structure
must bear a disproportionate load.

The low yield from the estate and gift
taxes is due to serious weaknesses in the
present law.

These weaknesses include excessive ex-
emptions, unduly low effective rates on most
estates, and the fact that the law as written
favors large estates over smaller ones, and
leaves substantial amounts of wealth com-
pletely beyond the reach of the tax laws.
Large fortunes may be transmitted from one
generation to another free of estate or gift
tax through the use of life estates. By this
means, vast accumulations of wealth may
completely escape tax over several genera-
tions.

Furthermore, the present law affords ex-
cessive opportunities for tax reduction by
splitting between the gift and estate taxes

125

[i8] Jan. 23

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the total amount of wealth transferred by an
individual. This makes the tax liability
depend, not upon the amount of wealth
which an individual leaves to his family, but
upon the manner in which he arranges the
disposition of his wealth. If a man leaves
his estate of $300,000 at death, one-half to
his wife and one-half to his three children,
an estate tax of $17,500 must be paid. If
his equally well-to-do neighbor gives away
$180,000 to his wife and three children over
a 5-year period and leaves them the other
$120,000 at death, no estate or gift tax what-
ever is paid. This difference in tax, whether
it depends upon fortuitous circumstances or
the caliber of legal counsel, is obviously
unwarranted.

To strengthen the estate and gift tax laws,
several steps are necessary. The laws con-
cerning the taxation of transfers by gift and
by bequest, by outright disposition and
through life estates, need to be coordinated
to provide uniform treatment and a base for
more effective taxation. In addition, the
present exemptions should be reduced and
the rates should be revised. These changes
will not only bring in more revenue, but they
will also improve the fairness of the estate
and gift tax laws and bring these taxes nearer
to their proper long-term place in our tax
system.

The rest of the additional revenue should
be obtained from adjustments in the corpo-
ration income tax. At the same time, certain
improvements should be made in this tax.

I recommend a moderate increase in the
tax rate applicable to that part of a corpora-
tion's income which is in excess of $50,000.
At the same time, I recommend that the tax
rate on corporate income between $25,000
and $50,000, which is now taxed at the ex-
cessively high "notch" rate of 53 per cent, be
reduced to the same rate that applies above
$50,000.

These changes in the tax rate structure
would go far toward removing the handicaps
which the present law places upon the expan-
sion of small corporations. The removal of
the excessive "notch" rate would reduce the
taxes paid by medium-sized corporations
whose continued growth is so essential to the
dynamic expansion of our economy. The
existing favorable tax rates for small corpo-
rations with incomes below $25,000 would
be retained. The tax increase would be con-
fined to less than one-tenth of all corpora-
tions.

Furthermore, I recommend that the loss
carry-forward provision be extended from
two to five years to provide more scope for
offsetting losses of bad years against profits
of subsequent years. This extension will give
increased incentive to business investment
affected by uncertain profit expectations. It
will be particularly helpful to new businesses
which, under the present provision permit-
ting losses to be carried forward only two
years, may be required to pay taxes over a
period of several years during which they
actually suffer a net loss.

At the same time that we make these
changes in the tax laws to stimulate invest-
ment at home, we should make certain
changes in the tax laws concerning income
derived from foreign investments and per-
sonal services abroad. This would provide
significant support to our efforts to extend
financial and technical assistance to under-
developed regions of the world.

Among the steps which should be taken
at this time are to postpone the tax on cor-
porate income earned abroad until it is
brought home, to extend and generalize the
present credit for taxes paid abroad, and to
liberalize the foreign residence requirement
for exemption of income earned abroad.
These changes, together with the safeguards
for our investors which we are in the process

126

Harry S. Truman, i^^o

Jan. 24 [19]

of negotiating with foreign governments,
will provide real stimulation for the expan-
sion of United States investment abroad.

The tax program I am recommending is
designed to strengthen our tax system so that
it will yield revenues sufficient to balance
expenditures as they are further reduced over
the next several years, and to provide some
surplus for debt reduction. Because of the
time lag in collecting taxes after their enact-
ment, these recommendations will not result
in any substantial increase in receipts in the
fiscal year 195 1, but they will result in larger
revenues in subsequent years and, at the
same time, substantially improve the struc-
ture of our tax system for the long run.

A sharp increase in taxes under present
economic conditions would be unwise.
However, in line with the policy of gearing

changes in revenue laws to the needs of our
economy, I would not hesitate, if strong
inflationary or deflationary forces should
appear, to support the use of all measures
necessary to meet the situation, including
more pronounced adjustment of tax rates up-
ward or downward, as the case might be.
We have come through the war and a
difficult transition period with the financial
strength of our Government maintained and
an economy producing far above prewar
levels. We should continuously seek to sus-
tain and improve these indispensable foun-
dations for progress. The tax program I am
recommending is an important and necessary
means to that end.

Harry S. Truman

note: On September 23, 1950, the President ap-
proved the Revenue Act of 1950 (64 Stat. 906).

19 Statement by the President on the New 75-Cent
Minimum Wage Rate. January 24, 1950

AT MIDNIGHT tonight the lot of a great
many American workers will be substan-
tially improved.

Today the minimum wage is 40 cents an
hour. Tomorrow the new 75-cent mini-
mum rate goes into effect for the 22 million
workers who are protected by the Fair Labor
Standards Act, our Federal wage-hour law.
Another amendment to that law will provide
gready increased protection for our young
boys and girls against dangerous industrial
work.

This legislation, passed by the 8ist Con-
gress at its first session, is an important addi-
tion to the laws we live by. It is a measure
dictated by social justice. It adds to our
economic strength. It is founded on the
belief that full human dignity requires at
least a minimum level of economic sufficiency
and security.

For many generations we have recognized
that there are legitimate roles for the Gov-
ernment to play in protecting our people
from economic injustice and hardship. Our
Founding Fathers explicidy stated this. In
the Preamble to the Constitution of the
United States, it is declared that this Gov-
ernment was established, among other rea-
sons, to "promote the general welfare."

Until 1933 ^^ objective of providing for
the general welfare had been implemented
primarily through State and Federal legisla-
tion to foster and protect business enterprise.
There had been few successful attempts be-
fore 1933 to protect our people as individuals.
Even the first Federal attempt to provide a
floor under wages in various industries failed
when the National Industrial Recovery Act
was declared unconstitutional in 1935.

We felt, however, that a government

127

[ip] Jan. 24

Public Papers of the Presidents

which could, for example, protect business
from the unfair competition of monopolistic
practices was not powerless to protect the
individual from the social and economic
evils of low wages. Therefore, we enacted,
in 1938, a Federal wage-hour law. In so
doing, we declared our purpose to eliminate
from the channels of commerce all competi-
tion based on labor practices detrimental to
the health and well-being of the Nation's
workers.

Three basic provisions were written into
the statute to achieve that goal. The law
set a firm floor under wages. This meant
that a man would no longer need relief
money for food after he worked a full week.
Then the law encouraged the spreading of
employment by requiring overtime pay after
a man worked 40 hours. No longer would
one man toil 60 or 70 hours a week while
another man was looking for a job. The
law also sought to prevent the employment
of boys and girls under 16 in industry. No
longer was the world of tomorrow to be
endangered by impairment of the health
and curtailment of the educational oppor-
tunities of the youth of today.

This law was a great achievement. It had
a highly beneficial effect upon our entire
economy. Despite the prophesies of dis-
aster, this law did not hurt business. On
the contrary, it helped all segments of our
population. When the test came, employers
who had feared they could not stay in busi-
ness under the law found, in fact, that they
could successfully meet its requirements.
The law added to the purchasing power of
our lowpaid workers, and by encouraging
the spreading of work put more people on

payrolls. This law thus gave great impetus
to the revival of our economy.

As our economy changed and developed,
however, it became apparent that the floor
we had placed under wages would no longer
serve as real protection to our workers or to
those employers who were paying fair wages.
As I stated to the Congress, the 40-cent mini-
mum wage became obsolete.

Ours is a growing society. We cannot
afford to stand still, and we cannot afford to
have our legislation become outmoded.
Consequently, in 1949 we reexamined and
reappraised the Federal wage-hour law in
the light of the 1 1 years' experience we had
had with it and in the context of our present
$250 billion national economy. The amend-
ments to the act, which go into effect at
midnight tonight, constitute our moderniza-
tion of this law.

As now amended, the Fair Labor Stand-
ards Act is a good law. But no law can be
drafted which will not need reexamination
in the light of subsequent developments.
I have therefore asked the Secretary of Labor
to keep me informed on the operation of the
new law. I am confident that our employers
and workers will find compliance with this
law even easier than compliance with the
original statute in 1938. I look forward to
great and lasting benefits from this legisla-
tion.

Our progress in this field points the way
for our future action. We shall not relax in
our efforts to provide a better life for all our
people.

note: The Fair Labor Standards Amendments of
1949 was approved on October 26, 1949 (63 Stat.
910). For the President's statement upon signing
the bill see 1949 volume, this series, Item 239.

128

Harry S. Truman, jgp

Jan. 26 [21]

20 Exchange of Messages With President Prasad of India.
January 26, 1950

ON THIS memorable day in India's history,
I send my greetings and best wishes and
those of the people of the United States to
you, and through you to the people of the
Union of India. The establishment of the
sovereign independent republic of India
within the Commonwealth represents a final
step in India's political transition which
closely parallels the political evolution of our
own country. Because of our traditional
sympathy with India, the people of the
United States are particularly happy to send
expressions of good will on this occasion.

The inauguration of India's new form of
government and of its new Constitution, and
the assumption of office by the first Presi-
dent, constitute an auspicious beginning of
the second half of the Twentieth Century.
May the future of the new republic, func-
tioning under its democratic Constitution,
be characterized by peace, prosperity and
good fortune.

Harry S. Truman

[His Excellency, The President of the Union of
India, New Delhi]

note: President Prasad's message follows:

On behalf of the people of the Republic of India,
I desire to thank you, Mr. President, and through
you the people of the United States of America for
your greetings and wishes on this historic occasion.
The inauguration of the Republic is a conspicuous
landmark in the long and eventful history of our
country in the struggle for our independence.

We have always had the sympathy and under-
standing of the people of the United States of
America. During the last two years the relations
between our two countries have become closer
through exchange of Ambassadors and the visit of
my Prime Minister last autumn to the United States.
As first President of the Republic of India it shall
be my constant endeavour to uphold the traditions
of democratic government and to foster, together
with other like-minded nations, the ideals of peace
and moral law that we have inherited from the
Father of our Nation, Mahatma Gandhi. In this
task, I am sure we can count on the cooperation of
the Government and people of the United States,
whose principles of individual liberty and the rule
of law are reflected in the provisions of our own
Constitution.

Rajendra Prasad

21 Remarks to the Women's Patriotic Conference on
National Defense. January 26, 1950

Madam President and ladies and gentlemen:
It is a very great pleasure for me to have
the privilege of being here tonight. I wish
I could have been here for the v^hole eve-
ning, but this has been quite a busy day for
me. Every day is, for that matter. You
know, I spend most of my time urging peo-
ple to do what they ought to do without
being urged. That is what is called the
power of the President. His powers are
mostly public relations. He is elected the
President of the United States, and he is the
only member of the Government who is
elected at large, except the Vice President;

and the Vice President is elected along with
him.

But the Vice President, as Mr. Dawes once
said, has only two duties: one is to preside
over the Senate, and the other one is to in-
quire about the President's health. The
Vice President and I spent many happy
hours in the Senate, and he presides over the
Senate, and he is not a bit interested in the
health of the President.

I had an experience today that is rather
unusual. One of my closest friends, the
mayor of Independence, Mo., passed away
on Tuesday night very suddenly, from a

41_3,5,5_65-

-12

129

[2i] Jan. 26

Public Papers of the Presidents

heart attack. He and I were raised together
in our hometown. He is 5 or 6 years
younger than I am — or was. We were in
the First World War together. He started
out as the commanding officer of C Battery
from Independence. At Camp Doniphan he
was made commander of A Battery. After
that he was made regimental adjutant of my
regiment of field artillery and he was in that
position until the war was over.

He has been mayor of Independence since
1924, when he was elected to that office. He
was elected to that office when I was in my
first elective oflSce. The returned soldiers
in that town, with my cooperation and help,
made him mayor. He was a great mayor of
that great city. And I was most anxious to
be present to pay my respects to his passing,
but conditions were such here in Washing-
ton that I had to stay here and discuss things
that aflected the whole Nation all morning
this morning.

And then this afternoon, the daughter of
another one of my closest friends was mar-
ried, and I was present at that ceremony.
That young lady I remember when she was
like this — along with my daughter. She is
younger than my daughter, but I won't give
away her age.

That brings home to me that here are the
young people ready to take up for the coun-
try, and here are those of us who have passed
the threescore mark, passing on to the next
world, leaving it to the younger people.

I have but one ambition as President of
the United States, and that is to see peace in
the world, and a working, efficient United
Nations to keep the peace in the world.
Then I shall be willing to do what my mayor
did, pass on happily so that some able,
younger man may carry on the work neces-
sary to keep this Government going.

You know we have the greatest govern-
ment in the world. I understand that this
is a meeting of the patriotic women of the

United States. Patriotic means "father,"
and patriotic means that you are working to
carry on for the benefit of your father —
carrying on for the benefit of your country.
And when you carry on for the benefit of
the only country in the world whose interest
is the welfare of all the people in the world,
you can't help but do what is right.

There is no difference in totalitarian states,
they are all just alike. They believe in gov-
ernment for the few and not for the welfare
of the many. Our Government is founded
on the theory that government is for the
welfare of the whole people and not for just
a few at the top.

I believe that sincerely. I have made quite
a study of government. I have had quite a
lot of experience in governmental affairs.
In fact, I have been in it for about 30 years,
more or less, and my viewpoint has not
changed.

I think the Constitution of the United
States is the greatest document of govern-
ment that the history of the world has ever
seen, and I expect to devote the rest of my
life, if the Lord is good to me, to upholding
and supporting that article of government.

When we do that, we will support the
United Nations and we will support the
welfare of all the people in the world. And
eventually we will have permanent peace.
That is all I live for.

Thank you very much.

note: The President spoke at 10 p.m. at the Statler
Hotel in Washington. His opening words "Madam
President" referred to Mrs. Norman Sheehe, national
president of the American Legion Auxiliary. In
the course of his remarks he referred to Roger T.
Sermon, former Mayor of Independence, Mo., and
Edith Cook (Drucie) Snyder, daughter of the Secre-
tary of the Treasury and Mrs. John W. Snyder, who
was married that day to Maj. John E. Horton,
former White House aide, at the National Cathedral
in Washington.

The conference was composed of 35 different
women's patriotic organizations from throughout
the United States.

130

Harry S. Truman, ig^o

Jan. 27 [22]

22 Statement by the President Upon Issuing Order Providing for the
Administration of the Mutual Defense Assistance Act.
January 27, 1950

the $1 billion in funds and contract author-
ity made available for assistance in the North
Adantic area can only be utilized after I
approve recommendations for an integrated
defense of the North Adantic area made by
the Council and the Defense Committee
established under the North Atlantic Treaty.
Finally, as a condition precedent to the fur-
nishing of assistance to any country, the
recipient must have entered into an agree-
ment v^^ith the United States embodying cer-
tain commitments concerning its use.

Prior to the effective date of the law, the
Department of State received requests for
military assistance from the follov^ing North
Adantic Treaty countries: Belgium, Den-
mark, France, Italy, Luxembourg, the
Netherlands, Norway, and the United
Kingdom.

The North Atlantic Defense Committee,
at its meeting in Paris on December i, 1949,
agreed unanimously on recommendations
made by the Military Committee for the
integrated defense of the North Adantic
area, and the North Atlantic Council
unanimously approved these recommenda-
tions on January 6, 1950. Subsequendy, the
Secretary of State and the Secretary of De-
fense recommended that I approve them.

I have today approved these recommenda-
tions as satisfying the pertinent provisions of
the Mutual Defense Assistance Act of 1949.

I have approved them because I am satis-
fied that they provide for the accomplish-
ment of an integrated defense of the North
Atlantic area. They do this by providing
for a common defense based on the coopera-
tive use of national military resources and

DURING the past 2 years the free nations
of Europe, with the help of the United States,
have made great strides toward recovery.
An essential element in this program has
been the establishment of conditions in
Western Europe adequate to give confidence
to the people and to insure a reasonable pros-
pect that the fruits of their labor would not
be immediately lost in the event of aggres-
sion.

It was realized that an adequate secu-
rity arrangement could be organized only
if the free nations of Western Europe joined
together and strengthened their individual
and collective defense through self-help and
mutual aid and if the United States joined
in the collective enterprise. In recognition
of this fact, the North Atlantic Treaty was
signed on April 4, 1949. Further, in recog-
nition of the concept of self-help and mutual
aid embodied in article 3 of the treaty, I
asked the Congress to authorize the furnish-
ing of military assistance to certain of its
signatories. At the same time I requested
authorization to furnish military assistance
to certain other free nations.

In response to my request, the Congress
passed the Mutual Defense Assistance Act of
1949 on October 6, 1949. Under its pro-
visions I am authorized to furnish military
assistance to certain foreign countries which
meet the specific conditions prescribed in
the law. In the case of parties to the North
Adantic Treaty, three such conditions are
imposed. In the first place, to be eligible
for assistance, the country must have re-
quested such assistance prior to the effective
date of the law. Secondly, $900 million of

131

[22] Jan. 27

Public Papers of the Presidents

on individual national specialization. They
contain agreement that these resources, in-
cluding United States military assistance,
will be used with maximum efficiency and
will not be used to develop separate and
unrelated defenses.

The North Atlantic Treaty is, in itself, a
deterrent to aggression. I believe that these
recommendations which have been agreed
to by the governments of the North Atlantic
Treaty nations constitute a major achieve-
ment under the treaty. They provide fur-
ther convincing evidence of the determina-
tion of these nations to resist aggression
against any of them and are a definite indica-
tion of the genuine spirit of cooperation
among the treaty members.

The Mutual Defense Assistance Act of
1949 also provided that the United States
should conclude agreements with the coun-
tries which request, and are to receive, mili-
tary assistance. Such agreements are being
signed today by the Secretary of State and
(representatives of Belgium, Denmark,
France, Italy, Luxembourg, the Netherlands,
Norway, and the United Kingdom. Their
texts will be made public and they will be

registered with the United Nations.

In view of these significant developments,
I have today also made formal provision for
the administration of the Mutual Defense
Assistance Act by issuing an Executive order
authorizing the Secretary of State to proceed
with the program in consultation with the
Secretary of Defense and the Administrator
for Economic Cooperation.

These developments are the result of close
cooperation among free nations which in-
tend to remain free. They are, of course,
first steps. The successful implementation
of the North Atlantic Treaty will require
constant and continuing effort and coopera-
tion by all its members. Planning for de-
fense cannot be static. It must be constantly
reviewed and revised in the light of chang-
ing circumstances and it must be flexible to
allow for maximum coordination of effort at
all times.

note: The President referred to Executive Order
10099 "Providing for the Administration of the
Mutual Defense Assistance Act of 1949" (Jan. 27,
1950; 3 CFR, 1 949-1 953 Comp., p. 295).

The Mutual Defense Assistance Act of 1949 v^^as
approved on October 6, 1949 (63 Stat. 714). For
the President's statement upon signing the act see
1949 volume, this series, Item 225.

23 The President's News Conference of
January 27, 1950

THE PRESIDENT, [i.] Well, Mr. ClifiEord
will quit as Special Counsel to the President
on Tuesday night at midnight. And Mr.
Murphy will be sworn in the next morning,
the 1st of February. There will be an ex-
change of letters available for you when you
go out, all mimeographed.

That's the only announcement I have to
make.

[2.] Q. Mr. President, regardless of the
outcome in the upper courts, will you or will

you not turn your back on Alger Hiss.f* ^

THE PRESIDENT. No commeut.

Q. Mr. President

THE PRESIDENT. That's a nice question!
What's that?

^On January 25, 1950, Alger Hiss, former State
Department official, v^^as sentenced by a United States
District Court to 5 years in a Federal penitentiary
for perjury. According to the New York Times,
Secretary of State Dean Acheson told reporters at
his news conference on January 25, "I do not intend
to turn my back on Alger Hiss."

132

Harry S. Truman, ig^o

Jan. 27 [23]

[3.] Q. Do you favor reducing the 25
percent excise tax placed on cameras and
photographic equipment, which kept people
from buying them during the war?

THE PRESIDENT. What's that? Didn't you
read my message on excise taxes? ^

Q. It is not mentioned.

THE PRESIDENT. You had better read that
message over again and your question will
be answered.

Q. It was not mentioned in there, sir.

THE PRESIDENT. Well, read the message
over again. Read it

[4.] Q. Mr. President, is there any point
in asking any other Alger Hiss questions?

THE PRESIDENT. No, there is no point in
asking any other Alger Hiss questions.

Q. I was trying to get away from that

THE PRESIDENT. They are not asked with
good intent, and I don't intend to answer
with good intent. [Laughterl

Q. Does that go for "red herring" ques-
tions?

THE PRESIDENT. No questious on that,
either.

Q. Po you approve Secretary Acheson's
statement?

THE PRESIDENT. No COmmCUt.

[5.] Q. Mr. President, have Mike
Kinney and Barney Dickman been in to see
you? ^

THE PRESIDENT. Mike Kiuuey is sitting
right here now. I saw Barney Dickman
yesterday.

Q. Did they talk about the Allison candi-
dacy? *

THE PRESIDENT. Well, they probably will,
when they get around to it, because that is
what they always come to see me about.

Q. There is a story printed in St. Louis
that you are rather angry with Governor

^ See Item 18.

® Michael Kinney, Missouri State Senator, and
Barnard F. Dickman, Postmaster for St. Louis, Mo.
*See Item 3 [8].

Forrest Smith, and attribute the present
political agitation in the State against the
Allison candidacy

THE PRESIDENT. No. No word of tHith in
that at all. I had a telephone conversation
with the Governor just the day before yes-
terday, and we are on the friendliest of terms.

Q. Was it on the Allison matter?

THE PRESIDENT. No, it was on another
matter.

[6.] Q. Mr. President, have you any
comment on a speech made in New York
City last night by Senator Byrd,^ in which
he charged that the administration is leading
the country to socialism?

THE PRESIDENT. That's a funny one, sure
enough.

[7.] Q. Mr. President, do you plan any
action in the coal case?

THE PRESIDENT. No commeut.

[8.] Q. Mr. President, there has been
some considerable discussion recendy — ^last
week — of a possible compromise on FEPC
along voluntary lines. Would you entertain
such an idea of compromise

THE PRESIDENT. My ideas on FEPC have
been very clearly set out, and I would advise
you to read that message.^

[9.] Q. Mr. President, what are you
planning to do about Representative
Patman's request that you impose a quota on
oil imports? ^

THE PRESIDENT. The Congressman was in

^The text of the address delivered by Senator
Harry Flood Byrd of Virginia before the National
Industrial Conference Board in New York City on
January 26 is printed in the Congressional Record
(vol. 96, p. A812).

'See 1948 volume, this series, Item 20.

^Representative Wright Patman of Texas, Chair-
man of the House Small Business Committee, met
with the President at the White House on January
26. At that time Congressman Patman gave the
President a report from the Committee calling for
quota restrictions to be imposed on foreign oil im-
ports, contending that they were damaging the
domestic oil industry.

133

[23] Jan. 27

Public Papers of the Presidents

to see me, and discussed the matter. We
are working on the situation.

[10.] Q. Mr. President, we have reports
from one newspaper that Ambassador Doug-
las is very ill and will not be continued in
the Ambassadorship even if he recovers

THE PRESIDENT. I cau scotch that one just
as easy as pie. The Ambassador is recover-
ing rapidly, and he will be back in England
inside the next 60 days.

[11.] Q. Mr. President, Ambassador
Capus Waynick says he talked North Caro-
lina politics with you the other day. I
wonder if you would like to see him in the
Senate?

THE PRESIDENT. I told you once that I was
not interested in dabbling in the primaries
of any other State outside of Missouri. That
is a North Carolina matter which they will
have to settle themselves.

[12.] Q. Mr. President, when Justice
Roberts' Atlantic Union group came in to
see you,^ did you endorse that group as op-
posed to any other group seeking generally
the same objectives?

THE PRESIDENT. No.

Q. You had no endorsement

THE PRESIDENT. No.

Q. He said so, but there has been some
question

THE PRESIDENT. The Judge and his group
were in here, and as usual we had a very
pleasant visit together, and I thanked them
for making a contribution toward helping
the United Nations work more efficiendy.

[13.] Q. Mr. President, have you any
comment on the suggested compromise by

®On January 20, former Supreme Court Justice
Owen J. Roberts, president of the Atlantic Union
Committee, headed a delegation of the Committee
which called on the President at the White House.
Their purpose in seeing the President was to urge
him to support the proposed convocation of a Fed-
eral convention of the democracies signatory to
the North Atlantic Pact to explore the possibility
of union between them.

Senator Russell on civil rights? ®

THE PRESIDENT. I dou't kuow anything
about that compromise. My compromise is
in my civil rights message.

[ 14.] Q. Mr. President, in the last 2 days
one House member of the Joint Congres-
sional Atomic Energy Committee, and today
one elder statesman, have spoken out publicly
on the question of a super bomb. There
have also been many columns written on the
subject. Is there anything authoritative that
you could give the American people on the
subject?

THE PRESIDENT. No, there isn't, and I don't
think anybody else has had anything au-
thoritative. I make that decision and no-
body else.

Q. Is there anything you could tell us as
to when the decision might be made? ^°

THE PRESIDENT. No, there is not.

[15.] Q. Mr. President, is Mr. Lilien-
thal's successor chosen yet? He told us this
morning that there was no change in his
plans to leave on the 15th of February.

THE PRESIDENT. His successor has not been
chosen. Whenever I get to the point where
I can announce it, you will have it right away.

Q. Mr. President, is another member of
the Commission resigning?

THE PRESIDENT. Not that I kuOW of .^^

®On January 25, several southern Democratic
congressional leaders met to plan their strategy in
dealing with the civil rights bill. After the meeting
the New York Times reported that a compromise
might be proposed containing the following provi-
sions: that the FEPC program be put on a voluntary
basis, that the antilynching legislation require proof
by the Government that in such mob action there
had been collusion between the mob and the law
officers, and that the poll tax be repealed only by a
constitutional amendment.

^^See Item 26.

^On February 7, 1950, the White House released
the text of the President's letter accepting the resig-
nation of Lewis L. Strauss as a member of the Atomic
Energy Commission. The text of Mr. Strauss' letter
was released with the President's reply. The resig-
nation became effective April 15, 1950.

134

Harry S. Truman, ig^o

Jan. 27 [24]

[16.] Q. Mr. President, Mr. Boyd, head
of the Bureau of Mines, has said that there
was or would be, possibly soon, a nationwide
emergency in coal. Have you received that
report yet? ^^

THE PRESIDENT. Yes, I have received the
report, and read it very carefully.

Q. Are you going to do anything about it?

THE PRESIDENT. No Comment.

[17.] Q. Mr. President, are we likely to
try again for an international control agree-
ment on atomic weapons on the basis of the
hydrogen bomb, in the United Nations?

THE PRESIDENT. I cau't commeut on that.
I am doing everything I possibly can to get
the international control of atomic energy.
I have been working at it ever since I became
President.

[18.] Q. Mr. President, have you any

^The report was in the form of a letter from
James Boyd, Director of the Bureau of Mines, to
Oscar L. Chapman, Secretary of the Interior. The
letter, dated January 20, 1950, stated that there were
40 million tons of coal on hand on January i and that
the danger point of 25 days of overall supply in the
hands of consumers was rapidly approaching.

The report concluded that "if it had not been for
the two 2-day weeks during the holidays and the
wildcat strikes during the past 3 weeks, it is esti-
mated that an additional 9 to 10 million tons would
have been available. The tonnage might well have
been the balancing point that would have kept days
supply above the danger point."

comment on what Mr. McCloy calls the
creeping blockade of Berlin? ^^

THE PRESIDENT. No commeut.

[19.] Q. Mr. President, does your an-
swer on those two civil rights questions mean
that you would not entertain a compromise?

THE PRESIDENT. I suggest that you read my
message, and that sets out exactly what I
want in civil rights. That's all the com-
ment I expect to make on it.

[20.] Q. Mr. President, how soon do you
feel you will be able to announce the new
member for the National Labor Relations
Board?

THE PRESIDENT. I Can't tell you. I am tak-
ing plenty of time on that, because I am go-
ing to get the man I want before I make the
appointment.

Q. Mr. President, is Mr. Styles the man?

THE PRESIDENT. No.^*

Reporter: Thank you, Mr. President.
THE PRESIDENT. You'rc welcomc.

note: President Truman's two hundred and four-
teenth news conference was held in his office at the
White House at 4:05 p.m. on Friday, January 27,
1950.

" On January 22 the Russian border guards at the
checkpoint at Helmstedt, Germany, began requiring
that all allied vehicles obtain clearances before pro-
ceeding on the Autobahn connecting Berlin and the
western zones of Germany.

^* See Item 29 [i].

24 Letter Accepting Resignation of Clark M. Clifford as Special
Counsel to the President. January 27, 1950

Dear Clar\:

I have now to take a step which from the
bottom of my heart I wish could be indefi-
nitely deferred. In acquiescing in your
wishes I am moved by circumstances with
which I have long been familiar. Reluc-
tantly, therefore, and with deep regret I ac-
cept, effective at the close of business on next
Tuesday, January thirty-first, the resignation

which you tender in your letter of January
twenty-sixth.

It would be difficult to overstate the value
of the services which you have rendered
your country. Before you undertook your
arduous tasks at the White House four years
ago you had met your war obligation by over
two years of service in the Navy.

Through six years of public service — ^and

135

[24] Jan. 27

Public Papers of the Presidents

those potentially among the most fruitful of
your professional life — you have devoted
your talents and superb abilities exclusively
to your country's welfare. That is a long
time for you to be away from the practice
of the law. The urgency of your need to
return is readily understood.

For all that you have given we owe you
a debt impossible to pay. You had much to
contribute as Special Counsel to the Presi-
dent because you brought to your work such
great resources of legal learning and experi-
ence as a practicing lawyer. Besides this you
had foresight and courage. Your reports on
the various problems on which I asked for
your advice were models of lucidity and
logic. In the marshaling and presentation of
facts your method reflected your days before
the jury. Quick in the detection of spurious

evidence and alert always in detecting the
fallacious in the arguments of our opponents,
your final opinions were always models of
brevity and accuracy, as well as clarity and
strength.

I shall miss you — we shall all miss you.
My regret at your departure is tempered by
the knowledge that you are to remain in
Washington and the assurance that I can call
upon you as occasion requires. In going you
carry with you every assurance of my per-
sonal gratitude and appreciation. You have
also earned the thanks of the Nation which
you have served so selflessly.
Sincerely,

Harry S. Truman

note: Mr. Clifford served as Special Counsel to the
President from July i, 1946, through January 31,
1950. His letter of resignation, dated January 26,
was released with the President's reply.

25 Letter to the President of the Senate and to the Speaker of the
House on U.S. Assistance to Palestine Refugees.
January 30, 1950

measures to reintegrate the Palestine refu-
gees into the economic life of the area. Its
recommendations are an example of the kind
of development and planning which is es-
sential to the economic grov^^th and improve-
ment of underdeveloped areas. The Mission,
in this survey, has taken into account the
human and natural resources of the region
in which these refugees find themselves, and
has recommended a program of economic
activity which will be of lasting benefit to
these areas and to the standard of living of
peoples who live there.

Our aid is needed to put this program into
effect and to help the Refugees and the in-
habitants of these areas in the Middle East
to achieve greater productivity through the
steps recommended in the report of the
Mission.

In my inaugural address, I stressed the

Dear Mr, :

I am transmitting herewith for the con-
sideration of the Congress a draft of pro-
posed legislation to enable the United States
to participate in and contribute to the United
Nations Relief and Works Agency for Pales-
tine Refugees in the Near East. This Agency
has been established by the General Assem-
bly of the United Nations to deal with the
problems created by the displacement of
hundreds of thousands of persons as a result
of the recent hostilities in Palestine.

The work of the Agency will be to carry
out the recommendations of the Economic
Survey Mission for the Middle East, ap-
pointed by the United Nations. This Survey
Mission, under the Chairmanship of Gordon
Clapp, was directed by the United Nations
to study the economic dislocation created by
the conflict in Palestine and to recommend

136

Harry S. Truman, ig^o

Jan. 30 [25]

importance, in the interests of our foreign
policy, of economic development of under-
developed areas. In such a case as this,
where relief for refugees is essential, it is
advantageous to combine the relief program,
with the beginnings of longer range eco-
nomic development.

Point Four legislation and legislation for
the United Nations Relief and Works
Agency for Palestine Refugees are comple-
mentary. There is no overlapping in the
request for funds for the two programs.

The immediate reason for the establish-
ment by the United Nations of the Economic
Survey Mission to the Middle East was the
hope that through an economic approach it
might be possible to facilitate a peace settle-
ment between Israel and the neighboring
Arab states. The problems of Palestine and
her neighbors are complicated by the con-
tinuing plight of over three-quarters of a
million persons who left their homes during
the conflict in Palestine, and are now refugees
in the neighboring lands. Homeless and
without work, these people cannot care for
themselves. The nations now giving them
asylum are themselves unable to care for
them. For some time to come they will re-
main dependent on others for their support.

In response to an appeal from the General
Assembly of the United Nations for relief
funds, made in December 1948, I recom-
mended to the Congress that the United
States should bear up to one-half of the cost
of a relief program which was estimated to
cost $32 million for a nine month period.
The Congress appropriated f 16 million for
this purpose. Our contribution has been
more than equalled by the contributions of
32 other countries. The fund thus raised
has been stretched to its limits and is now
exhausted.

The United Nations Economic Survey
Mission has recommended a combined relief

and public works program, and has esti-
mated the cost of this program at $54,900,000
for an eighteen month period beginning
January i, 1950.

This program is significant in its practical
approach to our objective of economic de-
velopment in underdeveloped areas. The
areas in question have unrealized economic
potentialities but require technical assistance
from abroad to assure their development.
The projects proposed will be complete in
themselves, representing intensive develop-
ment in small areas, and have been so se-
lected that they can be brought to completion
by the middle of 1951. They will result in
lasting economic benefits.

In illustrating what can be done with lim-
ited resources of soil and water by the appli-
cation of modern engineering and agricul-
tural techniques, these projects should point
the way to further development not only in
the countries where they are carried out, but
in neighboring countries as well. The suc-
cessful completion of this program should go
far in furthering conditions of political and
economic stability in the Near East. At the
same time the proposed program, while cost-
ing littie more than direct relief, looks to the
end of the direct relief program of the
United Nations in the Near East, and to
ultimate solution of the refugee problem.

I believe that it is appropriate that the
United States should continue to bear one-
half the cost of this program. I, therefore,
recommend that the Congress authorize and
appropriate $27,450,000 for an eighteen
month period. I trust that other nations
which have contributed to the program in
the past will be equally generous in the
future.

The importance of a substantial United
States contribution to this program is very
real. Not only is it consistent with the
humanitarian spirit of the American people;

137

[25] Jan. 30

Public Papers of the Presidents

it is also in our national interest to help main-
tain peaceful and stable conditions in the
Near East.

It is with these considerations in mind that
I recommend to the Congress the early enact-
ment of legislation to enable the United
States to take its part in this program of the
United Nations.

Sincerely yours,

Harry S. Truman

note: This is the text of identical letters addressed
to the Honorable Alben W. Barkley, President of
the Senate, and to the Honorable Sam Rayburn,

Speaker of the House of Representatives.

On June 5, 1950, the President approved the For-
eign Economic Assistance Act of 1950 (64 Stat.
198). Tide III of the act is entided "United Na-
tions Palestine Refugee Aid Act of 1950." Under
section 302 the Secretary of State was authorized
"to make contributions from time to time before
July I, 1 95 1, to the United Nations for the 'United
Nations Relief and Works Agency for Palestine
Refugees in the Near East,* established under the
resolution of the General Assembly of the United
Nations of December 8, 1949, in amounts not ex-
ceeding in the aggregate $27,450,000 for the pur-
poses set forth in this title.'* For the statement
by the President upon signing the Foreign Economic
Assistance Act, see Item 154.

26 Statement by the President on the Hydrogen Bomb.
]anuary 31, 1950

IT IS part of my responsibility as Com-
mander in Chief of the Armed Forces to see
to it that our country is able to defend itself
against any possible aggressor. Accordingly,
I have directed the Atomic Energy Com-
mission to continue its work on all forms of
atomic weapons, including the so-called
hydrogen or superbomb. Like all other
work in the field of atomic weapons, it is

being and will be carried forward on a
basis consistent with the overall objectives of
our program for peace and security.

This we shall continue to do until a satis-
factory plan for international control of
atomic energy is achieved. We shall also
continue to examine all those factors that
affect our program for peace and this coun-
try's security.

27 Telegram to Labor and Management Leaders Proposing a Plan
for Settling the Coal Industry Dispute. January 31, 1950

SINCE June of 1949 work has been per-
formed by the members of the United Mine
Workers of America, and bituminous coal
mines have been operated by their owners
and operators, only intermittently and with-
out the stabilizing advantages of a labor
contract. Many months of bargaining by
the representatives of the parties and the
efforts of mediation officers of the Govern-
ment have failed to produce a settlement of
their dispute. That dispute visits severe
hardship upon the miners and their families

and severe economic loss upon those who
have invested in bituminous coal mines.
The continuous production of an adequate
supply of bituminous coal is essential to the
economic stability, progress and security of
this Nation. Continuing stoppages, re-
strictions in production and shortages which
result from the inability of the parties to
setde their dispute are of grave concern to
the people of the Nation.

The law places the responsibility for
settling management-labor disputes on the

138

Harry S. Truman, ig^o

Jan. 31 [27]

parties, not the Federal Government. The
Government can give them mediation as-
sistance; but in the final analysis the parties
themselves must wiixjt their ov^n collective
bargaining agreement. Voluntary action,
not compulsion, in these matters is not only
my personal conviction but the national
policy. The Government can no longer
stand by, hovi^ever, and permit the continu-
ance of conditions w^hich have novi^ come to
have such a serious effect upon the public
interest. Accordingly, I am making the
follovi^ing proposal to the representatives of
the parties:

(a) That work be performed and normal
production maintained for a period of 70 days
beginning February 6 under the terms and
conditions last agreed upon by the Union and
the employers, excepting as such terms and
conditions may be modified by agreement of
the parties or by law^.

(b) That representatives of the parties ap-
pear before and cooperate v^^ith a Fact-Find-
ing Board v^hich I shall appoint. This Board
v^ould consist of three citizens representing
the public, none of them from Government,
Industry or Labor. It v^ould be empov^^ered
to inquire into any and all facts and circum-
stances relating to the current dispute. The
Board w^ould be requested to make its report,
including findings and recommendations,
w^ithin 60 days after February 6. The rec-
ommendations w^ould be addressed to the
parties and to the President, outlining the
procedures and the grounds for a fair and
equitable settlement of the current dispute.
Immediately after the publication of the
Board's report, representatives of the parties
MTould be called into conference by the Di-
rector of the Federal Mediation and Con-
ciliation Service, who would seek to assist

them in resolving their dispute in light of
the recommendations or any modification
thereof which might be suggested by the
parties. The parties or either of them would
be free to accept or reject the recommenda-
tions of the Board as they see fit.

In making this proposal, I do not wish to
interfere with any bargaining conferences
that may assist in the settlement of this dis-
pute. I would appreciate your informing
me by 12 noon, Saturday, February 4, 1950,
if the normal production of coal will be re-
sumed on Monday, February 6, 1950, with-
out reference to this proposal. If produc-
tion will be so resumed this proposal may be
disregarded. If you cannot inform me that
normal production will be resumed on Mon-
day without reference to this proposal, I
would then want your reply to this proposal
by 5 p.m. Saturday, February 4, and I urge
your acceptance in the National interest.

Harry S. Truman

note: This is the text of identical telegrams ad-
dressed to the following persons: George H. Love,
operators' spokesman for the National Bituminous
Wage Conference, and president of the Pittsburgh
Consolidation Co.; John L. Lewis, president. United
Mine Workers of America; Harry M. Moses,
president, H. C. Frick Coal Co.; and Joseph E.
Moody, president. Southern Coal Producers
Association.

On February 6, 1950, the President signed Execu-
tive Order 10106 "Creating a Board of Inquiry to
Report on a Labor Dispute Affecting the Bitumi-
nous Coal Industry of the United States" (3 CFR,
1 949-1 953 Comp., p. 300). The order was issued
pursuant to section 206 of the Labor Management
Relations Act, 1947 (Taft-Hartley Act).

On the same day the President appointed the
following persons as members of the Board: W. Wil-
lard Wirtz, John T. Dunlop, and David L. Cole,
chairman. The Board's report, entitled "Report to
the President: The Labor Dispute in the Bituminous
Coal Industry,*' was submitted to the President on
February 11, 1950 (Government Printing OflSce:
I950> 8 pp.).

See also Items 27, 35, and 49.

191

[51] Mar. 9

Public Papers of the Presidents

51 Statement by the President on the Record of the Home
Owners' Loan Corporation. March 9, 1950

THIS OCCASION marks another step in
the successful completion of the work of the
Home Owners' Loan Corporation. It has
already paid off the last of its $3,500 million
of bonded indebtedness. It is now making
its first repayment, of $26 million, to the
United States Treasury on the $200 million
advanced by the Government in 1933 as
capital stock.

Today the HOLC is over 95 percent liqui-
dated. Through earnings on its loans, it has
paid its own administrative expenses, and
offset the real estate losses which it had to
meet. It is now expected that when the
HOLC is fully liquidated, the Treasury will
have been repaid its capital advance in full,
plus a surplus of several million dollars.

The Home Owners' Loan Act was one of
the emergency measures passed during the
first days of the Democratic administration
in 1933. Foreclosures on city homes were
then running at the rate of 1,000 every day.

In 3 years the HOLC refunded the over-
due mortgages of more than i million fami-
lies with long-term loans at lower interest
rates. These loans, with later advances,
amounted to nearly %'^Vi billion.

Not only did these funds save families
from foreclosure. At the same time, they
enabled banks, insurance companies, savings
and loan associations and other real estate
investors to exchange defaulted mortgages
for $2% billion in cash and Government
bonds. This new life blood saved many
hundreds of financial institutions — permit-
ting them to pay off their depositors or in-
vestors as necessary and to remain in busi-
ness.

Furthermore, the HOLC program aided
city and town governments in meeting their
payrolls and keeping up their essential serv-
ices. As payment for the overdue taxes of

HOLC borrowers, local governments re-
ceived nearly half a billion dollars in less
than 3 years.

In all these ways the HOLC program was
an outstanding example of the intelligent
investment of public funds to meet urgent
depression needs — helping to save homes,
businesses, and local governments from the
disastrous effects of widespread unemploy-
ment and loss of income.

The families whose homes were saved
were encouraged to hold on to their prop-
erties and repay their loans. In the depres-
sion years, they scrimped and sacrificed to
meet their monthly payments; in later years,
when times were better, they often made pay-
ments in advance — ^many paying off their
debts in full far ahead of schedule.

When the HOLC was started some people
expressed the fear that the experiment of
direct Government lending to homeowners
in default on their mortgages and taxes
might cost the Treasury huge losses. But
those who supported the program had faith
in the future. They knew that through
vigorous public and private action the down-
ward spiral of depression could be reversed,
and that these loans would be sound assets
which would be repaid in full. That is what
happened.

The record of the Home Owners' Loan
Corporation illustrates a lesson that has been
proved time and time again in recent years.
It is that by wise use of its powers, the Gov-
ernment can engage in broad programs of so-
cial benefit — ^and conduct them efficiently
and without waste of public funds.

The Home Owners' Loan Corporation was
successful in terms of dollars and cents.
But, much more important, it was successful
in terms of human values — ^in helping hun-
dreds of thousands of families to maintain

192

Harry S. Truman, ig^o

Mar. 9 [52]

themselves as self-reliant homeowners, se-
cure in their hard-earned property, and free
of the threat of eviction through no fault of
their ov^n.

We should all be proud of this demonstra-
tion of bold and constructive Government ac-
tion for the good of the whole country.

52 The President's News Conference of
March 9,. 1950

THE PRESIDENT. I have no special announce-
ments to make this afternoon. I will try to
answer questions.

[i.] Q. Mr. President, may we take the
appointment of Martin Hutchinson to the
Federal Trade Commission as an indication
of a trend; that is, of more top-level appoint-
ments among southern Truman men?

THE PRESIDENT. Why, I don't know
whether to take it as a trend or not.
I expect to appoint people on whose quali-
ties and qualifications I can depend.

Q. Can you find some more down South?

THE PRESIDENT. I bcUeve I Can. I am very
sure I can. [Laughter]

[2.] Q. Mr. President, Ambassador
Bay, Ambassador to Norway, was in to
see you today. Is he going to be the new
Chairman of the National Security Re-
sources Board?

THE PRESIDENT. No. Hc is Ambassador
to Norway, and he is going to stay Ambas-
sador to Norway.

Q. Mr. President, what is the progress on
the National Security Resources Board?

THE PRESIDENT. I bcg your pardon?

Q. What is the progress on the National
Security Resources Board?

THE PRESIDENT. One of these days I will
make an announcement to you, and you will
know all about it.

[3.] Q. Mr. President, when you are out
West, are you going to do any campaign-
ing in California for Senator Downey or his
rival?

THE PRESIDENT. I have no intention of go-
ing to California.

Q. Mr. President, on the Western trip,
Secretary Chapman said this morning that
he expected you to go out to Grand Coulee,
and possibly also to the dedication of a dam
in Wyoming?

THE PRESIDENT. That trip has been only in
the discussion stage. We hope to get it ar-
ranged for the first part of May, if that is
possible. As soon as definite arrangements
are made, why, I will announce it to you
so you can have plenty of time to pack your
grips.

Q. Is it your hope to take in the Chicago
meeting also on the same trip?

THE PRESIDENT. There has been some talk
on that subject.

Q. Is it definite

THE PRESIDENT. Nothing has been defi-
nitely arranged.

Q. Is it definite yet, Mr. President, on the
Chicago stop?

THE PRESIDENT. No. All this is tentative.
As soon as we have the thing sewed up, why,
I will announce it to you in a form that you
will understand every word of it, so that you
will have plenty of time to get ready.

Q. Mr. President, just to clarify my think-
ing on that — [laughter] — when you said
that you are not going to California, does
that rule out the November campaign in
California?

THE PRESIDENT. I havc no intention of
going to California.

41-355—65-

-16

193

[52] Mar. 9

Public Papers of the Presidents

Q. You don't rule out the November cam-
paign?

THE PRESIDENT. No, not neccssarily.

[4.] Q. Mr. President, there is to be a
meeting of the Inter- American Economic and
Social Council here March 20, apparently
with general representation from Latin
America and a very active interest in the
point 4 program, among other things. Has
this conference required your official atten-
tion, or do you wish to make any observa-
tions about it?

THE PRESIDENT. No. No, I do nOt.

Q. Any chance of your speaking at that
meeting, sir?

THE PRESIDENT. I hardly think so. If it is, it
will be a long-distance speech. [Laughterl

[5.] Q. Mr. President, would you care to
comment on the suggestion of Governor
Luis Munoz Marin, to permit the people of
Puerto Rico to adopt their own constitution?

THE PRESIDENT. I have no comment on that.

[6.] Q. Mr. President, any new nomina-
tions in mind for the Atomic Energy Com-
mission?

THE PRESIDENT. No. If I havc them, I will
announce them to you in the beginning.

Q. There is a report that there is no inten-
tion of filling the full membership. Is that —
anything to that?

THE PRESIDENT. I haveu't heard it. But
you can hear anything — ^you can hear all
sorts of rumors about anything you want to
start. This is the best rumor town in the
world. But I hadn't heard that one. That's
a new one.

Q. What do you think of Senator Ty-
ding's idea for one military but not more
than two military men in regular service on
that Commission?

THE PRESIDENT. I think that was setded by
the 79th Congress, and then, you know, it
was somewhat balled up by the 8oth Con-
gress; but that ruling of the 79th was my

recommendation and still stands — civilian
control of atomic energy.

[7.] Q. Mr. President, recently quite a
good many European leaders expressed
agreement with the idea of integration and
unity of Europe. I wonder if you had read
those statements, and whether you would
comment

THE PRESIDENT. Yes, I havc, and I am very
much pleased with the attitude of the Euro-
pean correspondents and editors who have
been writing those articles. I think they are
on the right track.

[8.] Q. Mr. President, has Congressman
Sabath sold you on the idea of the Gossett-
Lodge amendment?

THE PRESIDENT. I didn't Understand the
question.

Q. Congressman Sabath is opposed to the
idea of the Gossett-Lodge amendment,
changing the method of election of a
President? ^

THE PRESIDENT. Yes, I think he is opposed
to it, but he told me the other day he was
going to get a rule and let the House vote on
it, which I hope he will do.

[9.] Q. Mr. President, what do you think
about the House action in approving state-
hood for Alaska and Hawaii?

THE PRESIDENT. I recommeuded it to them
three different times.

Q. You are still for it?

THE PRESIDENT. Why Certainly! Can't
change the Message on the State of the
Union that quickly. [Laughter]

Q. Well, one of my editors wanted me to
say it over again. [More laughter]

THE PRESIDENT. That's all right — that's all
right.

[10.] Q. Mr. President, the House Judi-
ciary Committee delayed a vote on the civil
rights bill. I wonder if you plan to ask
the chairman to bring that out?

^ See Item 29 [18].

194

Harry S. Truman, ig^o

Mar. 13 [53]

THE PRESIDENT. I havc been urging that
that be brought out for — ^let me see — it has
been about 5 years now, hasn't it? I am still
urging it.

[11.] Q. Mr. President, there is a dis-
pute in the House Labor Committee on
Federal aid to education. There are two
groups that seem to be for the general idea,
but are conflicting in the nature of the bill.
One of them

THE PRESIDENT. I Can't Settle details and
arguments

Q. I was going to ask whether you are for
the Senate bill ?

THE PRESIDENT. 1 Can't Settle details

and arguments between legislators as to how
a bill is to be worded. I have expressed my
opinion time and again on aid to educa-
tion, and that opinion still stands as it was in
the message each time.

[12.] Q. Have you any observations on
Senator McCarthy's charges ?

THE PRESIDENT. Well, uo, I have no ob-
servations to make on it. I think the Sen-
ate committee is handling the situation very
well.

[13.] Q. Mr. President, has the chair-
man of the Educational Labor Committee
in the House assured you, like Mr. Sabath,
that he would get the bill out?

THE PRESIDENT. He has been in touch
with me that he is sure to get the bill out ever
since the Senate bill went over to the House.
I haven't had a recent conversation with
him on the subject individually.

[14.] Q. Mr. President, do you have
any observations on the British elections, now
that it has

THE PRESIDENT. No, I haven't. That is
the business of the British. I have no com-
ment to make on their internal private af-
fairs.

[15.] Q. Mr. President, there were re-
ports a year or so ago, after a certain Navy
ship went to Cuba, of various people aboard
being seasick. Are any precautions being
taken for the cruise next Sunday?

THE PRESIDENT. The "Doc" Suggested a
new medicine which he said is very good,
so it will be available.

Q. Is it liquid? [Laughter]

THE PRESIDENT. Well, it's a kind of tablet,
about as big as your thumbnail. That could
be followed by certain liquid refreshment.
[Laughter]

Reporter: Thank you, Mr. President.

THE PRESIDENT. You're entirely welcome.
note: President Truman's two hundred and twen-
tieth news conference was held in his office at the
White House at 4 p.m. on Thursday, March 9, 1950.

53 Special Message to the Congress Summarizing the New
Reorganization Plans. March 13, 1950

To the Congress of the United States:

I am today transmitting to the Congress
21 plans for reorganization of agencies of the
Executive Branch. These plans have been
prepared under the authority of the Reor-
ganization Act of 1949. Each is accompa-
nied by the message required in that Act.

Our ability to make such comprehensive
recommendations is due in large part to the
outstanding work of the Commission on

Organization of the Executive Branch of the
Government. The plans which I am trans-
mitting are all designed either to put into
effect specific recommendations of the Com-
mission or to apply principles set forth by
the Commission in its reports.

When these plans become effective, we
shall have acted on almost half the proposals
made by the Commission on Organization.
I expect to transmit additional plans for

195

[53] Mar. 13

Public Papers of the Presidents

putting into effect other recommendations
of the Commission later in the present ses-
sion of Congress.

The 21 plans I am transmitting today are
designed to accomplish the following pur-
poses:

Plans 1-6 transfer to the heads of six de-
partments the functions and powers now
conferred by law on subordinate officials.
The six departments affected are Treasury,
Justice, Interior, Agriculture, Commerce,
and Labor.

Plans 7-13 fix responsibility for the day-
to-day administration of seven regulatory
boards and commissions in the chairmen of
these bodies rather than in the members
collectively. The agencies affected are the
Interstate Commerce Commission, Federal
Trade Commission, Federal Power Commis-
sion, Securities and Exchange Commission,
Federal Communications Commission, Na-
tional Labor Relations Board, and Civil
Aeronautics Board.

Plans 14 and 19 transfer two functions to
the Department of Labor from other Gov-
ernment agencies.

Plans 15-18 and 20 transfer certain func-
tions to and from the General Services Ad-
ministration in order to round out the
organizational pattern of this agency, which
was created last year.

Plan 21 transfers the functions of the
Maritime Commission to the Department of
Commerce, where they are reconstituted in
a Federal Maritime Board and a Maritime
Administrator.

The first 13 plans all have the same ob-
jective — to establish clear and direct lines of
authority and responsibility for the manage-
ment of the Executive Branch. The heads
of departments and the Chairmen of regu-
latory bodies will be made clearly respon-
sible for the effectiveness and economy of
Governmental administration and will be
given corresponding authority, so that the

public, the Congress, and the President may
hold them accountable for results in terms
both of accomplishments and of cost.

The Commission on Organization placed
great stress upon the establishment of clear
lines of authority and responsibility. This
was, in fact, the very first of its recommenda-
tions. The opening three paragraphs on the
first page of its initial report read as follows:

"In this part of its report, the Commission
on Organization of the Executive Branch of
the Government deals with the essentials of
effective organization of the executive
branch. Without these essentials, all other
steps are doomed to failure.

"The President, and under him his chief
lieutenants, the department heads, must be
held responsible and accountable to the
people and the Congress for the conduct of
the executive branch.

"Responsibility and accountability are im-
possible without authority — the power to
direct. The exercise of authority is impos-
sible without a clear line of command from
the top to the bottom, and a return line of
responsibility and accountability from the
bottom to the top."

Again, in its report on regulatory agencies,
the Commission made the centering of ad-
ministrative responsibility its first recom-
mendation, writing as follows:

"Administration by a plural executive is
universally regarded as inefficient. This has
proved to be true in connection with these
commissions. . . . We recommend that all
administrative responsibility be vested in the
chairman of the commission."

Through these plans, authority placed by
law in subordinate officials is transferred to
the heads of the six departments. In the case
of the State and Post Office Departments,
comparable authority was placed in the de-
partment heads by legislation and reorgani-
zation action effected last year.

Another feature of the departmental plans

196

Harry S. Truman, ig^o

Mar. 13 [53]

is the establishment of Administrative Assist-
ant Secretaries in each of these six depart-
ments. These positions are established in
order to provide top-level assistance to each
department head in the heavy managerial
responsibilities of his office. They are set up
within the classified civil service for the pur-
poses both of achieving continuity in office
and of obtaining persons with the greatest
experience in the specialized functions of
management.

In regard to the regulatory agencies, the
plans distinguish between two groups of
functions necessary to the conduct of these
agencies. One group includes the substantive
aspects of regulation — that is, the determina-
tion of policies, the formulation and issu-
ance of rules, and the adjudication of cases.
All these functions are left in the board or
commission as a whole. The other group of
functions comprises the day-to-day direction
and internal administration of the complex
stafi organizations which the commissions
require. These responsibilities are trans-
ferred to the chairmen of the agencies, to be
discharged in accordance with policies which
the commissions may establish. The chair-
man is to be designated in each agency by
the President from among the Commission
members.

In plan No. 12, unified responsibility is
once more established in the National Labor
Relations Board by transferring to the Board
and its Chairman the functions of the Gen-
eral Counsel and by abolishing the statutory
office of the General Counsel. This plan will
bring to an end the confusion which has
resulted from divided responsibility.

The changes embodied in the first 13
plans are fundamental to the sustained drive
we have undertaken to increase effective
and economical management of the Execu-
tive Branch. Only by placing in the heads of
departments and agencies the authority nec-
essary to direct and supervise the machinery

of the Executive Branch can the maximum
benefit be attained from the reorganization
and reassignment of the functions which
make up that branch.

The 8 remaining plans propose reassign-
ment of certain functions. They will take us
further toward the goal of grouping the pro-
grams of the Government in the smallest
practicable number of departments and agen-
cies organized according to major purpose.

Transfer of the functions of the Maritime
Commission to the Department of Com-
merce through plan No. 21 will mark a long
step forward in the integration of the many
Governmental programs affecting transpor-
tation. This step, again, is in accord with
the recommendations of the Commission on
Organization of the Executive Branch.

For more than a decade, the Department
has been in the process of becoming the ma-
jor transportation agency of the Government.
The establishment of the Civil Aeronautics
Administration within the Department was
the first major move in this direction. The
transfer of the Weather Bureau to the De-
partment was based in large part on that Bu-
reau's importance to transportation. One
of the reorganization plans which I trans-
mitted to the Congress last year transferred
the Bureau of Public Roads to the Depart-
ment. Now, with the addition of the func-
tions of the Maritime Commission, the De-
partment will have jurisdiction over the
major portion of the operating aspects of the
programs of the Government relating to air,
highway, and water transportation, as well as
over the development and coordination of
policies affecting the Nation's transportation
system as a whole.

Plan No. 21 estabHshes in the Department
of Commerce a three-man Federal Maritime
Board and a Maritime Administration under
a Maritime Administrator. The award of
subsidies and all regulatory functions are
transferred from the present Maritime Com-

197

[53] Mar. 13

Public Papers of the Presidents

mission to the new Board. The remaining
functions of the Maritime Commission, in-
volving ship construction and other admin-
istrative operations, are transferred to the
Department of Commerce for execution
through the Maritime Administration.

The plan also provides for appointment of
an Under Secretary of Commerce for Trans-
portation, vi^ho vv^ill assist the Secretary in
the direction and coordination of the trans-
portation activities now centered in the De-
partment.

In plans Nos. 14 and 19 the Department
of Labor is given two new functions — the
Bureau of Employees' Compensation, trans-
ferred from the Federal Security Agency;
and the responsibility for coordination of the
enforcement of wages and hours legislation
affecting Federal or Federally-financed con-
tracts. These two steps will further strength-
en the Department of Labor as the center
of responsibility for Governmental pro-
grams which protect the welfare of em-
ployees. This is the same essential purpose
that underlay the transfer last year of the
Bureau of Employment Security to the De-
partment.

The remaining five plans represent a logi-
cal evolution of the responsibilities of the
new General Services Administration. Two
of these plans (18 and 20) transfer addi-
tional service responsibilities to the General
Services Administration; and the other
three (15-17) remove from it various in-
appropriate functions it received from the
recendy abolished Federal Works Agency.

In plan No. 18 the Administrator of Gen-
eral Services is given expanded authority
over the acquisition and control of Federal
office space, particularly outside the Dis-
trict of Columbia. He is also assigned
the responsibility by plan No. 20 for the
preservation and publication of certain pub-
lic documents, such as laws and territorial
papers, now handled by the Department of

State, but unrelated to the foreign affairs
mission of the Department.

Plans 15-17 transfer from the Administra-
tion six programs relating to pubUc works,
community facilities and school aid. Alaska
and Virgin Islands public works functions
are transferred by plan No. 15 to the Depart-
ment of the Interior; assistance to school dis-
tricts overburdened by Federal activities and
certain water pollution control functions are
assigned by plan No. 16 to the Federal Secu-
rity Agency; and advance planning of non-
Federal public works and the management
and disposal of war public works are trans-
ferred to the Housing and Home Finance
Agency by plan No. 17.

When considered in conjunction with the
reorganization plans and legislation which
were made effective in 1949, these 21 plans
bring near to realization certain major goals
that have been set forth by the Commission
on Organization. These are the same goals
toward which the Congress was aiming
when it enacted the Reorganization Act of
1949, and toward which I have been working
in the exercise of my duties as the manager
responsible for the efficiency and economy of
the Executive Branch.

The first of these goals is to improve over-
all management of the Executive Branch.
During 1949 the agencies comprising the
Executive Office of the President were re-
grouped, the internal organization of the
Civil Service Commission was strengthened
to equip it for leadership in personnel ad-
ministration, and the housekeeping func-
tions of the Government as a whole were
consolidated in a new General Services Ad-
ministration. Today's plans provide fur-
ther improvement in the organization of the
last of these agencies.

The second objective is to improve the
internal management of individual depart-
ments and agencies. Congressional and ad-
ministrative action last year strengthened

198

Harry S. Truman, i^^o

Mar. 13 [54]

the structure of three departments — State,
Defense, and Post Office — and clarified the
management authority of the Department
heads. Today's plans lay comparable foun-
dations for improving the internal manage-
ment of the remaining six departments and
of seven regulatory agencies.

The third general goal is to reduce the
number of Governmental agencies and to
group functions according to the primary
purposes of these agencies. Progress v^^as
made last year in the grouping of functions
relating to transportation and to labor. To-

day's plans deal again with those two areas,
as well as eifiFecting other significant shifts.

The reorganization and modernization of
the Government may never be called com-
plete. I am confident, however, that these
plans will take us well along the road toward
more effective, economical and responsible
Government.

Harry S. Truman

note: For the President's messages to Congress
transmitting Reorganization Plans 1-2 1, see Items

54-76.

54 Special Message to the Congress Transmitting Reorganization
Plans I Through 13 of 1950. March 13, 1950

To the Congress of the United States:

I am transmitting today Reorganization
Plans Nos. i to 13 o£ 1950, designed to
strengthen the management of six executive
departments and seven regulatory commis-
sions. These plans propose a major clari-
fication of the lines of responsibility and au-
thority for the management of the Executive
Branch. They would put into effect the
principal remaining recommendations of the
Commission on Organization of the Execu-
tive Branch of the Government affecting the
location of management responsibility with-
in the departments and agencies.

A principal finding of the Commission
on Organization was that clean-cut lines of
authority do not exist in the Executive
Branch. The Commission stated that "the
first and essential step in the search for ef-
ficiency and economy in the Executive
Branch of the Federal Government" is to
correct the present diffusion of authority and
confusion of responsibility. The Commis-
sion warned that without this action "all
other steps to improve organization and
management are doomed to failure."
Reorganization Plans Nos. i to 13 pro-

pose a bold approach to the problem of de-
lineating responsibility and authority for the
management of the Executive Branch.
Clearer lines of responsibility and author-
ity will strengthen our constitutional system
and will also help to establish accountability
for performance in office — a basic premise of
democratic government. I urge the Con-
gress to add its approval to my acceptance
of these recommendations of the Commis-
sion on Organization.

Reorganization Plans Nos, i to 6, Relating
to Six Executive Departments,

Reorganization Plans Nos. i to 6, inclu-
sive, relate to the Departments of the Treas-
ury, Justice, the Interior, Agriculture, Com-
merce, and Labor. With certain exceptions,
these plans transfer to the respective depart-
ment heads the functions of other officers and
agencies of the departments. They permit
each department head to authorize the func-
tions vested in him to be performed by any
officer, agency, or employee of the depart-
ment. In addition. Administrative Assistant
Secretaries are provided for each of the six
departments, and additional Assistant Secre-

199

[54] Mar. 13

Public Papers of the Presidents

taries are authorized for the Department of
the Interior and the Department of Agri-
culture.

In its introduction to its first report, the
Commission on Organization stated two "es-
sentials of effective organization." These
are:

"The President, and under him his chief
lieutenants, the department heads, must be
held responsible and accountable to the peo-
ple and the Congress for the conduct of the
executive branch," and

"The wise exercise of authority is impos-
sible without the aids which staff institu-
tions can provide to assemble facts and rec-
ommendations upon which judgment may
be made and to supervise and report upon
the execution of decisions."
The Commission specifically recommended:

"Under the President, the heads of de-
partments must hold full responsibility for
the conduct of their departments," and

"Department heads must have adequate
staff assistance if they are to achieve effi-
ciency and economy in departmental opera-
tions."

These six reorganization plans put into effect
these recommendations.

Through the years the Congress has re-
peatedly endorsed the policy of holding
agency heads fully accountable for all the
functions of their agencies. Last year this
policy was pursued in the legislation author-
izing reorganization of the Department of
State and establishing the General Services
Administration. A reorganization plan
applying this principle to the Post Office
Department was likewise approved.

However, in the six departments covered
by these plans, all functions are not now
uniformly vested in the department heads.
Some statutory authority is held independ-
endy by subordinate oiSScers and agencies.
These plans extend fully to the six depart-
ments the principles of strengthening de-

partmental management by eliminating the
patchwork exceptions that now exist.

The transfers recommended in these plans
accomplish three principal objectives. First,
they provide a clearer line of responsibility
and authority from the President through
the department heads down to the lowest
level of operations in each department.
Second, department heads are made respon-
sible in fact for activities within their agen-
cies for which they are now, in any case, held
accountable by the President, the Congress,
and the people. Third, department heads
are enabled to effect appropriate internal ad-
justments as may be necessary within their
departments to permit the most effective
organization of departmental resources and
bring about continuous improvement in
operations.

These reorganization plans exclude from
transfer to the department heads two classes
of functions which are retained in their
present status. These are the functions of
the hearing examiners appointed under the
Administrative Procedure Act and the func-
tions of government corporations in the
departments.

The provision in each of these plans for an
Administrative Assistant Secretary is also
based on a recommendation of the Commis-
sion on Organization. These positions were
recommended in order that each department
head, in addition to being made fully re-
sponsible for his department, be given ade-
quate staff facilities to assist him in the
managerial side of his responsibilities. The
accomplishment of specific improvements in
management can be made only through
continuous attention to the effective perform-
ance of such aids to management as budget-
ing, accounting, personnel, and management
analysis.

For the government as a whole steps arc
being taken in accord with the Commission's
recommendations to improve the usefulness

200

Harry S. Truman, ig$o

Mar. 13 [54]

of these aids to management — steps toward a
performance budget, improved accounting
methods, better personnel administration,
and government-wide management improve-
ment. The results of these actions have been
promising, but they demonstrate also that
this work needs increased departmental at-
tention. While the responsibilities of the
Administrative Assistant Secretaries are not
fixed by these plans, it is intended that these
officials will work primarily on aiding the
department heads to achieve better manage-
ment.

As recommended by the Commission on
Organization, these reorganization plans
provide for appointment of the Administra-
tive Assistant Secretaries from the classified
civil service and fix a salary at the top of
that service. These plans also provide for
appointment by the department heads with
the approval of the President. Such a meth-
od of appointment will tend to establish a
career pattern for these positions extending
across departmental lines. Presidential ap-
proval will emphasize that the Administra-
tive Assistant Secretaries should assume a
government-wide approach to management
problems. This arrangement is consonant
with the authority placed in the President by
the Classification Act of 1949 to designate
positions in the top grade authorized under
that Act.

Two of the reorganization plans provide
additional Assistant Secretaries, to be ap-
pointed by the President and confirmed by
the Senate, one in the Department of the
Interior and two in the Department of Agri-
culture. This step is in accord with recom-
mendations of the Commission on Organiza-
tion. The additional Assistant Secretaries
are needed to provide more adequate staff
assistance in supervising and directing the
policies and programs of these large depart-
ments. At present the Department of the
Interior has two such officials and there is one

such position in the Department of Agricul-
ture.

Under the provisions of Reorganization
Plan No. 2 the tide of the Assistant to the
Attorney General is changed to Deputy
Attorney General, and an additional Assist-
ant Attorney General is provided in lieu
of the Assistant Solicitor General, the
latter o£Sce being abolished. These changes
are designed to reflect more accurately the
position and responsibility of these two offi-
cials of the Department of Justice.

Reorganization Plans Nos. 7 to 75, Relating
to Seven Regulatory Boards and Commis-
sions

Reorganization Plans Nos. 7 to 13, inclu-
sive, relate to the Interstate Commerce Com-
mission, the Federal Trade Commission, the
Federal Power Commission, the Securities
and Exchange Commission, the Federal
Communications Commission, the National
Labor Relations Board, and the Civil Aero-
nautics Board. These plans are designed to
strengthen the internal administration of
these bodies by making the Chairman, rather
than the commission or board as a whole,
responsible for day-to-day administration.
Also, the function of designating the Chair-
man of these bodies is vested in the Presi-
dent in those instances where this function is
not already a Presidential one.

These plans carry into effect the first and
most important recommendation of the Com-
mission on Organization relating to regu-
latory commissions. The Commission rec-
ommended "that all administrative respon-
sibility be vested in the Chairman of the
Commission." Its reasons were summarized
as follows:

"Purely executive duties — those that can
be performed far better by a single admin-
istrative official — ^have been imposed upon
these commissions with the result that these
duties have sometimes been performed badly.

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[54] Mar. 13

Public Papers of the Presidents

The necessity for performing them has inter-
fered with the performance of the strictly
regulatory functions of the commissions."
Elsewhere the Commission observed:

"Administration by a plural executive is
universally regarded as ineflScient. This
has proved to be true in connection with
these commissions."

Since the creation of the Interstate Com-
merce Commission in 1887, the board or com-
mission has been an established form of
Federal organization for regulatory activ-
ities. The plural membership of each of
these agencies has been based, presumably,
on the usefulness of deliberation in the rule-
making and adjudicative processes. How-
ever, as their work has developed through
the years, each of these agencies has become,
in addition to a deliberative body, an orga-
nization of staff elements whose work
must be programmed and whose members
must be recruited, supervised, and led. The
smallest of these staffs is now over 600 in
number and the largest over 2,000, and the
difficulties of supervision are multiplied be-
cause of the highly technical nature of the
legal, engineering, accounting, and other
skills which must be successfully interrelated.

The commissions, concerned primarily
with the substantive problems of regulation
and with the adjudication of cases, cannot
give adequate attention to the day-to-day
executive direction of complex organiza-
tions. To the extent that they have con-
cerned themselves with administrative prob-
lems, the unwieldiness of the structure has
sometimes rendered administration slow,
cumbersome, and indecisive.

Accordingly, within the limitations ex-
plained in later paragraphs, each of these
plans vests in the Chairman, in each case,
responsibility for appointment and super-
vision of personnel employed under the com-
mission, for distribution of business among
such personnel and among administrative

units of the commission, and for the use
and expenditure of funds.

In the conduct of all of these activities, the
Chairman will be bound by the general
policies established by the commission and
by its regulatory decisions, findings, and
determinations. In addition, the right is
specifically reserved to the commission to re-
vise budget estimates and determine the dis-
tribution of funds among the major pro-
grams and purposes of the agency. The
appointment of the heads of major adminis-
trative units under the commission is subject
to approval of the commission, and each
Commissioner retains responsibility for ac-
tions affecting personnel employed regularly
and full time in his immediate office.

The proposals contained in these reorga-
nizations are not new. Several of the com-
missions have already made considerable
progress in placing administrative respon-
sibility in their Chairman. Therefore, the
effect of these plans is to extend uniformly
to all commissions a pattern of organization
demonstrated by experience to be successful.

The fact that under these reorganization
plans the commissions retain all substantive
responsibilities deserves special emphasis.
The plans only eliminate multi-headed su-
pervision of internal administrative func-
tioning. The commissions retain policy con-
trol over administrative activities since these
are subject to the general policies and regu-
latory decisions, findings, and determinations
of the commissions.

The plans do not contemplate that the
Chairman will be relieved of any of his
duties as a member and presiding ofiScer of
the commission. They simply place on him
the additional responsibilities for the opera-
tions of the staff. The Chairman will need
to establish the necessary administrative ar-
rangements to carry out these responsibilities.

Reorganization Plan No. 12 terminates
the present division and confusion of respon-

202

Harry S. Truman, ig^o

Mar. 13 [55]

sibility in the National Labor Rdations
Board by abolishing the office of the General
Counsel of the Board. The Senate last
year indicated its approval of this step. The
reorganization plan in effect restores unified
authority and responsibility in the Board. As
in the case of the other plans for regulatory
agencies, certain administrative and execu-
tive responsibilities are placed in the Chair-
man. The relationship betv^een the Board
and the Chairman is identical with that pro-
vided for the other regulatory agencies. This
action eliminates a basic defect in the pres-
ent organization of the National Labor Re-
lations Board and provides an organizational
pattern consistent with that established for
the other regulatory agencies.

In the plans relative to four commissions —
the Interstate Commerce Commission, the
Federal Trade Commission, the Federal
Power Commission, and the Securities and
Exchange Commission — the function of des-
ignating the Chairman is transferred to the
President. The President by law now desig-
nates the Chairmen of the other three regu-
latory commissions covered by these plans.
The designation of all Chairmen by the

President follows out the general concept
of the Commission on Organization for pro-
viding clearer lines of management responsi-
bility in the Executive Branch. The plans
are aimed at achieving more fully these
management objectives and are not intended
to affect the independent exercise of the
commissions* regulatory functions.

All thirteen of these reorganization plans
will aid in making a more efficient govern-
ment. The plans affecting the departments
will help straighten out the lines of respon-
sibility and authority, improve administra-
tive accountability, and make departmental
management sufficiendy flexible to meet
changing problems. The plans relating to
the regulatory commissions will result in the
more businesslike and effective administra-
tion of the Government's regulatory pro-
grams. In short, these plans provide for
better management of the executive depart-
ments and regulatory commissions and thus
will assure to the public the best possible
service at the lowest possible costs.

Harry S. Truman

note: For further messages to the Congress on Re-
organization Plans 1-13, see Items 55-67.

55 Special Message to the Congress Transmitting Reorganization
Plan I of 1950. March 13, 1950

To the Congress of the United States:

I transmit herewith Reorganization Plan
No. I of 1950, prepared in accordance with
the Reorganization Act of 1949 and provid-
ing for reorganizations in the Department
of the Treasury. My reasons for transmit-
ting this plan are stated in an accompanying
general message.

After investigation I have found and here-
by declare that each reorganization included
in Reorganization Plan No. i of 1950 is
necessary to accomplish one or more of the
purposes set forth in section 2(a) of the

Reorganization Act of 1949.

I have found and hereby declare that it is
necessary to include in the accompanying
reorganization plan, by reason of reorgani-
zations made thereby, provisions for the
appointment and compensation of an Ad-
ministrative Assistant Secretary of the Treas-
ury. The rate of compensation fixed for
this officer is that which I have found to
prevail in respect of comparable officers in
the Executive Branch of the Government.

The taking effect of the reorganizations
included in this plan may not in itself result

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Public Papers of the Presidents

in substantial immediate savings. However,
many benefits in improved operations are
probable during the next years v^hich will
result in a reduction in expenditures as com-
pared with those that would be otherwise
necessary. An itemization of these reduc-

tions in advance of actual experience under
this plan is not practicable.

Harry S. Truman

note: Reorganization Plan i of 1950 is printed in
House Document 505 (8ist Cong., 2d sess.). It
did not become effective.

56 Special Message to the Congress Transmitting Reorganization
Plan 2 of 1950. March 13, 1950

To the Congress of the United States:

I transmit herev^^ith Reorganization Plan
No. 2 of 1950, prepared in accordance Wixh
the Reorganization Act of 1949 and provid-
ing for reorganizations in the Department of
Justice. My reasons for transmitting this
plan are stated in an accompanying general
message.

After investigation I have found and here-
by declare that each reorganization included
in Reorganization Plan No. 2 of 1950 is
necessary to accomplish one or more of the
purposes set forth in section 2(a) of the
Reorganization Act of 1949.

Assistant Attorney General. The rate of
compensation fixed for these officers is that
which I have found to prevail in respect of
comparable officers in the Executive Branch
of the Government.

The taking effect of the reorganizations
included in this plan may not in itself result
in substantial immediate savings. However,
many benefits in improved operations are
probable during the next years which will
result in a reduction in expenditures as com-
pared with those that would be otherwise
necessary. An itemization of these reduc-
tions in advance of actual experience under
this plan is not practicable.

Harry S. Truman

note: Reorganization Plan 2 of 1950 is published
in the U.S. Statutes at Large (64 Stat. 1261) and in
the 1 949-1 953 Compilation of title 3 of the Code of
Federal Regulations (p. 1002). It became effective
on May 24, 1950.

57 Special Message to the Congress Transmitting Reorganization
Plan 3 of 1950. March 13, 1950

To the Congress of the United States:

I transmit herewith Reorganization Plan
No. 3 of 1950, prepared in accordance with
the Reorganization Act of 1949 and pro-
viding for reorganizations in the Depart-
ment of the Interior. My reasons for
transmitting this plan are stated in an ac-
companying general message.

After investigation I have found and

hereby declare that each reorganization in-
cluded in Reorganization Plan No. 3 of 1950
is necessary to accomplish one or more of
the purposes set forth in section 2(a) of the
Reorganization Act of 1949.

I have found and hereby declare that it is
necessary to include in the accompanying
reorganization plan, by reason of reorgani-
zations made thereby, provisions for the ap-

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Harry S. Truman, ig^o

Mar. 13 [59]

pointment and compensation of an Assistant
Secretary of the Interior and an Administra-
tive Assistant Secretary of the Interior. The
rate of compensation fixed for these officers
is that which I have found to prevail in
respect of comparable officers in the Execu-
tive Branch of the Government.

The taking effect of the reorganizations
included in this plan may not in itself re-
sult in substantial immediate savings.
However, many benefits in improved op-

erations are probable during the next years
which will result in a reduction in expendi-
tures as compared with those that would be
otherwise necessary. An itemization of
these reductions in advance of actual ex-
perience under this plan is not practicable.

Harry S. Truman

note: Reorganization Plan 3 of 1950 is published
in the U.S. Statutes at Large (64 Stat. 1262) and in
the 1 949-1 953 Compilation of title 3 of the Code
of Federal Regulations (p. 1003). It became ef-
fective on May 24, 1950.

58 Special Message to the Congress Transmitting Reorganization
Plan 4 of 1950. March 13, 1950

To the Congress of the United States:

I transmit herewith Reorganization Plan
No. 4 of 1950, prepared in accordance with
the Reorganization Act of 1949 and provid-
ing for reorganizations in the Department
of Agriculture. My reasons for transmitting
this plan are stated in an accompanying
general message.

After investigation I have found and
hereby declare that each reorganization in-
cluded in Reorganization Plan No. 4 of 1950
is necessary to accomplish one or more of the
purposes set forth in section 2(a) of the
Reorganization Act of 1949.

I have found and hereby declare that it is
necessary to include in the accompanying
reorganization plan, by reason of reorganiza-
tions made thereby, provisions for the
appointment and compensation of two As-
sistant Secretaries of Agriculture and an Ad-

ministrative Assistant Secretary of Agricul-
ture. The rate of compensation fixed for
these officers is that which I have found to
prevail in respect of comparable officers in
the Executive Branch of the Government.

The taking effect of the reorganizations in-
cluded in this plan may not in itself result
in substantial immediate savings. However,
many benefits in improved operations are
probable during the next years which will
result in a reduction in expenditures as com-
pared with those that would be otherwise
necessary. An itemization of these reduc-
tions in advance of actual experience under
this plan is not practicable.

Harry S. Truman

note: Reorganization Plan 4 of 1950 is printed in
House Document 508 (8ist Cong., 2d sess.). It
did not become effective.

59 Special Message to the Congress Transmitting Reorganization
Plan 5 of 1950. March 13, 1950

To the Congress of the United States:

I transmit herewith Reorganization Plan
No. 5 of 1950, prepared in accordance with
the Reorganization Act of 1949 and pro-

viding for reorganizations in the Depart-
ment of Commerce. My reasons for
transmitting this plan are stated in an ac-
companying general message.

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Public Papers of the Presidents

After investigation I have found and
hereby declare that each reorganization in-
cluded in Reorganization Plan No. 5 of
1950 is necessary to accomplish one or more
of the purposes set forth in section 2(a) of
the Reorganization Act of 1949.

I have found and hereby declare that it
is necessary to include in the accompanying
reorganization plan, by reason of reorgani-
zations made thereby, provisions for the ap-
pointment and compensation of an Admin-
istrative Assistant Secretary of Commerce.
The rate of compensation fixed for this of-
ficer is that which I have found to prevail
in respect of comparable officers in the Ex-
ecutive Branch of the Government.

The taking effect of the reorganizations
included in this plan may not in itself result
in substantial immediate savings. How-
ever, many benefits in improved operations
are probable during the next years which
will result in a reduction in expenditures as
compared with those that would be other-
wise necessary. An itemization of these re-
ductions in advance of actual experience
under this plan is not practicable.

Harry S. Truman

note: Reorganization Plan 5 of 1950 is published
in the U.S. Statutes at Large (64 Stat. 1263) and
in the 1 949-1 953 Compilation of title 3 of the
Code of Federal Regulations (p. 1004). It became
effective on May 24, 1950.

60 Special Message to the Congress Transmitting Reorganization
Plan 6 of 1950. March 13, 1950

To the Congress of the United States:

I transmit herewith Reorganization Plan
No. 6 of 1950, prepared in accordance with
the Reorganization Act of 1949 and pro-
viding for reorganizations in the Department
of Labor. My reasons for transmitting this
plan are stated in an accompanying general
message.

After investigation I have found and here-
by declare that each reorganization included
in Reorganization Plan No. 6 of 1950 is
necessary to accomplish one or more of the
purposes set forth in section 2(a) of the Re-
organization Act of 1949.

I have found and hereby declare that it
is necessary to include in the accompanying
reorganization plan, by reason of reorganiza-
tions made thereby, provisions for the ap-
pointment and compensation of an Admin-
istrative Assistant Secretary of Labor. The

rate of compensation fixed for this officer is
that which I have found to prevail in respect
of comparable officers in the Executive
Branch of the Government.

The taking effect of the reorganizations
included in this plan may not in itself result
in substantial immediate savings. How-
ever, many benefits in improved operations
are probable during the next years which will
result in a reduction in expenditures as com-
pared with those that would be otherwise
necessary. An itemization of these reduc-
tions in advance of actual experience under
this plan is not practicable.

Harry S. Truman

note: Reorganization Plan 6 of 1950 is published in
the U.S. Statutes at Large (64 Stat. 1263) and in
the 1 949-1 953 Compilation of title 3 of the Code
of Federal Regulations (p. 1004). It became effec-
tive on May 24, 1950.

206

Harry S. Truman, ig^o

Mar. 13 [63]

61 Special Message to the Congress Transmitting Reorganization
Plan 7 of 1950. March 13, 1950

To the Congress of the United States:

I transmit herewith Reorganization Plan
No. 7 of 1950, prepared in accordance with
the Reorganization Act of 1949 and provid-
ing for reorganizations in the Interstate
Commerce Commission. My reasons for
transmitting this plan are stated in an ac-
companying general message.

After investigation I have found and
hereby declare that each reorganization in-
cluded in Reorganization Plan No. 7 of 1950
is necessary to accomplish one or more of
the purposes set forth in section 2(a) of the
Reorganization Act of 1949.

Harry S. Truman

note: Reorganization Plan 7 of 1950 is printed in
House Document 511 (81 st Cong., 2d sess.). It did
not become effective.

62 Special Message to the Congress Transmitting Reorganization
Plan 8 of 1950. March 13, 1950

To the Congress of the United States:

I transmit herewith Reorganization Plan
No. 8 of 195O5 prepared in accordance with
the Reorganization Act of 1949 and provid-
ing for reorganizations in the Federal Trade
Commission. My reasons for transmitting
this plan are stated in an accompanying
general message.

After investigation I have found and here-
by declare that each reorganization included
in Reorganization Plan No. 8 of 1950 is nec-
essary to accomplish one or more of the
purposes set forth in section 2(a) of the
Reorganization Act of 1949.

The taking effect of the reorganizations

included in this plan may not in itself result
in substantial immediate savings. However,
many benefits in improved operations are
probable during the next years which will
result in a reduction in expenditures as com-
pared with those that would be otherwise
necessary. An itemization of these reduc-
tions in advance of actual experience under
this plan is not practicable.

Harry S. Truman

note: Reorganization Plan 8 of 1950 is published in
the U.S. Statutes at Large (64 Stat. 1264) and in
the 1 949-1 953 Compilation of title 3 of the Code
of Federal Regulations (p. 1005). It became effec-
tive on May 24, 1950.

63 Special Message to the Congress Transmitting Reorganization
Plan 9 of 1950. March 13, 1950

To the Congress of the United States:

I transmit herewith Reorganization Plan
No. 9 of 1950, prepared in accordance with

the Reorganization Act of 1949 and provid-
ing for reorganizations in the Federal Power
Commission. My reasons for transmitting

207

[63] Mar. 13

Public Papers of the Presidents

this plan are stated in an accompanying
general message.

After investigation I have found and here-
by declare that each reorganization included
in Reorganization Plan No. 9 of 1950 is
necessary to accomplish one or more of the
purposes set forth in section 2(a) of the
Reorganization Act of 1949.

The taking effect of the reorganizations
included in this plan may not in itself result
in substantial immediate savings. However,
many benefits in improved operations are

probable during the next years v^hich will
result in a reduction in expenditures as com-
pared with those that would be otherwise
necessary. An itemization of these reduc-
tions in advance of actual experience under
this plan is not practicable.

Harry S. Truman

note: Reorganization Plan 9 of 1950 is published
in the U.S. Statutes at Large (64 Stat. 1265) and in
the 1 949-1 953 Compilation of tide 3 of the Code of
Federal Regulations (p. 1005). It became effective
on May 24, 1950.

64 Special Message to the Congress Transmitting Reorganization
Plan 10 of 1950. March 13, 1950

To the Congress of the United States:

I transmit herewith Reorganization Plan
No. 10 of 1950, prepared in accordance with
the Reorganization Act of 1949 and pro-
viding for reorganizations in the Securities
and Exchange Commission. My reasons for
transmitting this plan are stated in an ac-
companying general message.

After investigation I have found and
hereby declare that each reorganization in-
cluded in Reorganization Plan No. 10 of
1950 is necessary to accomplish one or more
of the purposes set forth in section 2(a) of the
Reorganization Act of 1949.
The taking effect of the reorganizations

included in this plan may not in itself result
in substantial immediate savings. How-
ever, many benefits in improved operations
are probable during the next years which
will result in a reduction in expenditures as
compared with those that would be other-
wise necessary. An itemization of these
reductions in advance of actual experience
under this plan is not practicable.

Harry S. Truman

note: Reorganization Plan 10 o£ 1950 is published
in the U.S. Statutes at Large (64 Stat. 1265) and in
the 1 949-1 953 Compilation of title 3 of the Code
of Federal Regulations (p. 1006). It became ef-
fective on May 24, 1950.

65 Special Message to the Congress Transmitting Reorganization
Plan II of 1950. March 13, 1950

To the Congress of the United States:

I transmit herewith Reorganization Plan
No. II of 1950, prepared in accordance with
the Reorganization Act of 1949 and pro-
viding for reorganizations in the Federal
Communications Commission. My reasons
for transmitting this plan are stated in an ac-
companying general message.

After investigation I have found and
hereby declare that each reorganization in-
cluded in Reorganization Plan No. 11 of
1950 is necessary to accomplish one or more
of the purposes set forth in section 2(a) of
the Reorganization Act of 1949.

The taking effect of the reorganizations
included in this plan may not in itself result

208

Harry S. Truman, ig^o

Mar. 13 [67]

in substantial immediate savings. However,
many benefits in improved operations are
probable during the next years which will
result in a reduction in expenditures as com-
pared with those that would be otherwise
necessary. An itemization of these reduc-

tions in advance of actual experience under
this plan is not practicable.

Harry S. Truman

note: Reorganization Plan 11 of 1950 is printed in
House Document 515 (8ist Cong., 2d sess.). It
did not become effective.

66 Special Message to the Congress Transmitting Reorganization
Plan 12 of 1950. March 13, 1950

To the Congress of the United States:

I transmit herewith Reorganization Plan
No. 12 of 1950, prepared in accordance with
the Reorganization Act of 1949 and provid-
ing for reorganizations in the National Labor
Relations Board. My reasons for transmit-
ting this plan are stated in an accompanying
general message.

After investigation I have found and here-
by declare that each reorganization included
in Reorganization Plan No. 12 of 1950 is
necessary to accomplish one or more of the
purposes set forth in section 2(a) of the
Reorganization Act of 1949.

Harry S. Truman

note: Reorganization Plan 12 of 1950 is printed in
House Document 516 (8ist Cong., 2d sess.). It did
not become effective.

6j Special Message to the Congress Transmitting Reorganization
Plan 13 of 1950. March 13, 1950

To the Congress of the United States:

I transmit herewith Reorganization Plan
No. 13 of 1950, prepared in accordance with
the Reorganization Act of 1949 and provid-
ing for reorganizations in the Civil Aero-
nautics Board. My reasons for transmitting
this plan are stated in an accompanying
general message.

After investigation I have found and
hereby declare that each reorganization in-
cluded in Reorganization Plan No. 13 of
1950 is necessary to accomplish one or more
of the purposes set forth in section 2(a) of
the Reorganization Act of 1949.
The taking effect of the reorganizations

Harry S. Truman

note: Reorganization Plan 13 of 1950 is published
in the U.S. Statutes at Large (64 Stat. 1266) and in
the 1 949-1 953 Compilation of title 3 of the Code
of Federal Regulations (p. 1006). It became effec-
tive on May 24, 1950.

209

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Public Papers of the Presidents

68 Special Message to the Congress Transmitting Reorganization
Plan 14 of 1950. March 13, 1950

To the Congress of the United States:

I transmit herewith Reorganization Plan
No. 14 of 1950, prepared in accordance with
the provisions of the Reorganization Act of
1949. For the purpose of coordinating the
administration of labor standards under vari-
ous statutes relating to Federal construction
and public works or to construction with
Federally financed assistance or guarantees,
the reorganization plan authorizes the Sec-
retary of Labor to prescribe appropriate
standards, regulations and procedures with
respect to these matters and to make such
investigations concerning compliance with
and enforcement of labor standards as he
deems desirable. The purpose is to assure
consistent and eflfective enforcement of such
standards.

The plan is in general accord with the
recommendations of the Commission on
Organization of the Executive Branch of the
Government. It constitutes a further step in
rebuilding and strengthening the Depart-
ment of Labor to make it the central agency
of the Government for dealing with labor
problems.

After investigation, I have found and
hereby declare that the reorganization con-
tained in this plan is necessary to accomplish
one or more of the purposes set forth in sec-
tion 2(a) of the Reorganization Act of 1949.

There are several laws regulating wages
and hours of workers employed on Federal
contracts for public works or construction.
The "Eight Hour Laws" limit the employ-
ment of laborers and mechanics on such proj-
ects to eight hours per day and permit their
employment in excess of that limit only upon
condition that time and one-half the basic
wage rate is paid for the excess hours. The
Davis-Bacon Act provides that the minimum

rates of pay for laborers and mechanics on
certain Federal public works contracts shall
be those prevailing for the corresponding
classes of workers in the locality as deter-
mined by the Secretary of Labor. The
Copeland Anti-Kickback Law prohibits the
exaction of rebates or kickbacks from work-
ers employed on the construction of Federal
public works or works financed by the Fed-
eral Government and authorizes the Secre-
tary of Labor to make regulations for con-
tractors engaged on such projects.

In addition to the above statutes, there are
several Acts which require the payment of
prevailing wage rates, as determined by the
Secretary of Labor, to laborers and mechanics
employed on construction financed in whole
or in part by loans or grants from the Fed-
eral Government or by mortgages guaran-
teed by the Federal Government. These
Acts are: The National Housing Act, the
Housing Act of 1949, the Federal Airport
Act, and the Hospital Survey and Construc-
tion Act of 1946.

With the exception of the Department of
Labor, the Federal agencies involved in the
administration of the various Acts are di-
vided into two classes: (i) agencies which
contract for Federal public works or con-
struction; and (2) agencies which lend or
grant Federal funds, or act as guarantors of
mortgages, to aid in the construction of proj-
ects to be built by State or local public
agencies or private individuals and groups.
The methods of enforcing labor standards
necessarily differ between these two groups
of agencies.

The methods adopted by the various
agencies for the enforcement of labor stand-
ards vary widely in character and effective-
ness. As a result, uniformity of enforce-

210

Harry S. Truman, ig^o

Mar. 13 [69]

ment is lacking and the degree of protection
afforded workers varies from agency to
agency.

In order to correct this situation, this plan
authorizes the Secretary of Labor to co-
ordinate the administration of legislation re-
lating to wages and hours on Federally fi-
nanced or assisted projects by prescribing
standards, regulations, and procedures to
govern the enforcement activities of the
various Federal agencies and by making such
investigations as he deems desirable to as-
sure consistent enforcement. The actual
performance of enforcement activities,
normally including the investigation of

complaints of violations, will remain the
duty of the respective agencies awarding the
contracts or providing the Federal assistance.
Since the principal objective of the plan
is more effective enforcement of labor stand-
ards, it is not probable that it will result in
savings. But it will provide more uniform
and more adequate protection for workers
through the expenditures made for the en-
forcement of the existing legislation.

Harry S. Truman

note: Reorganization Plan 14 of 1950 is published
in the U.S. Statutes at Large (64 Stat. 1267) and in
the 1 949-1 953 Compilation of title 3 of the Code
of Federal Regulations (p. 1007). It became ef-
fective on May 24, 1950.

69 Special Message to the Congress Transmitting Reorganization
Plans 15, 165 and 17 of 1950. March 13, 1950

To the Congress of the United States:

I am transmitting today Reorganization
Plans Nos. 15, 16, and 17 of 1950, prepared
in accordance with the provisions of the Re-
organization Act of 1949. The three plans
transfer various activities of the General
Services Administration to other departments
and agencies as follov^s: Plan No. 15 assigns
the administration of the Alaska and Virgin
Islands public w^orks programs to the Depart-
ment of the Interior; Plan No. 16 transfers
the responsibility for financial assistance to
public school districts and grants and loans
for water pollution control to the Federal
Security Agency; and Plan No. 17 transfers
the administration of advances for the plan-
ning of non-Federal public works and the
management and disposal of certain war
public works to the Housing and Home
Finance Agency.

These plans will contribute to the further
development of the General Services Ad-
ministration as a central services agency by
transferring several specialized functions,

which it has at present, to more appropriate
locations within the Government. At the
same time Reorganization Plans No. 18 and
20, which I am also transmitting to the Con-
gress today, assign to the Administration
additional responsibility for such services as
the control of space in public buildings and
the publication and preservation of various
public documents.

The General Services Administration was
created by the Federal Property and Ad-
ministrative Services Act of 1949 to provide
a focal point within the Executive Branch
for the provision and improvement of such
common administrative services as supply,
buildings administration and records man-
agement. The act sought to achieve this
objective by consolidating in the new Ad-
ministration a group of service activities
which had previously been scattered through-
out the Executive Branch.

Many of these service activities at the time
the act was passed were being performed by
the Federal Works Agency. At the same

211

[69] Mar. 13

Public Papers of the Presidents

time the Federal Works Agency was per-
forming certain specialized functions not of
interest to the government as a whole.
When the Congress transferred all the func-
tions of the Federal Works Agency to the
General Services Administration it was rec-
ognized that these specialized functions
should be separated out at a later date by re-
organization action. Only if this is done
will the General Services Administration be
able to fulfill its basic function and concen-
trate its efforts on the improvement of the
vast and complex service activities of the
Federal Government.

The transfers effected by these plans are
consistent with the recommendations of the
Commission on Organization of the Execu-
tive Branch of the Government. The pro-
grams which involve direct Federal construc-
tion are transferred to the Department of the
Interior. The programs involving grants or
loans to states and localities are transferred
to the departments and agencies having
major responsibility for these particular
activities.

This general message states my reasons for
transmitting Reorganization Plans Nos. 15,
16, and 17. The legal findings as to neces-
sity and savings required by the Reorganiza-
tion Act of 1949 are included in separate
messages transmitting each of the three plans.

REORGANIZATION PLAN NO. 15

(Alaska and Virgin Islands Public Works)

Reorganization Plan No. 15 transfers the
responsibilities of the General Services Ad-
ministrator for public works programs in
Alaska and the Virgin Islands to the Secre-
tary of the Interior in order that the direction
of these activities may be assumed by the De-
partment generally charged with the de-
velopment and welfare of Alaska and the
Virgin Islands. The Alaska public works

program is very new, having been authorized
by Public Law 264 of the 8ist Congress.
This Act empowers the General Services Ad-
ministrator, with the concurrence of the
Secretary of the Interior, to build community
facilities for public bodies in the Territory
for an average purchase price of one-half of
the estimated cost of construction. The Vir-
gin Islands program is much smaller and has
been in effect since the approval on Decem-
ber 20, 1944, of Public Law 510, 78th Con-
gress. Under the provisions of this Act, the
General Services Administrator builds
various public facilities authorized by the
legislation.

Both the Alaska and the Virgin Islands
programs involve the direct provision of
assistance to eligible public bodies. Both
projects involve construction by the Federal
Government of approved facilities, which
upon completion are turned over to the local
authorities for which they were built. These
responsibilities are thus largely unrelated to
the administrative services with which the
General Services Administration is primarily
concerned.

The Department of the Interior is already
charged with the supervision of public works
units in the Caribbean area and in Alaska.
Chief among these are the Alaska Road
Commission and the Puerto Rico Recon-
struction Administration. Moreover, the
operations of the Alaska Railroad and the
Virgin Islands Corporation are under the
supervision of the Department. Also of
importance in the administration of these
public works programs are the close rela-
tionships which exist between the Depart-
ment of the Interior and the governors of
Alaska and the Virgin Islands. These oflS-
cials are appointed by the President, but they
normally report through the Secretary of the
Interior. The transfer will thus clarify re-
sponsibility and simplify relationships in the

212

Harry S. Truman, ig^o

Mar. 13 [69]

execution of public works activities in
Alaska and the Virgin Islands.

REORGANIZATION PLAN NO. 1 6

(Assistance to School Districts and Water
Pollution Control)

Reorganization Plan No. i6 transfers the
school assistance and water pollution control
activities of the General Services Adminis-
tration to the Federal Security Agency.

The rendering of assistance to local school
districts overburdened by the activation of
Federal projects or installations was first
authorized by the Lanham Act of 1940, as
amended. Since the expiration of the Lan-
ham Act there have been four one-year ex-
tensions of the program. The plan will
place the responsibility for its future admin-
istration in the Federal Security Agency,
whose Office of Education is generally re-
sponsible for the execution of Federal-aid
programs designed to improve or extend
educational opportunities.

Reorganization Plan No. 16 also consoli-
dates responsibility for the administration of
the Water Pollution Control Act of 1948 in
the Federal Security Agency by transferring
to it the functions of the General Services
Administration relating to grants and loans
for the planning and construction of sewage
treatment plants.

At the present time over 90 percent of the
administration of the water pollution con-
trol activities authorized by Public Law 845,
8oth Congress, is carried on by the Public
Health Service of the Federal Security
Agency. That agency is already responsible
for the preparation of comprehensive water
pollution control plans for interstate streams,
for the conduct of surveys and research, for
the maintenance of relationships with state
water pollution control agencies, and for the
approval of sewage treatment projects for

which grants or loans are requested by state
or local authorities. The effect of the plan
will be to place the entire responsibility for
the approval and administration of the grant
and loan provisions of the Water Pollution
Control Act in the Federal Security Agency,
as the agency with the predominant interest
in the attainment of the objectives of the
legislation.

The consolidation of water pollution con-
trol functions will simplify relationships with
the state and local governments participating
in the program. Under the existing arrange-
ments two Federal agencies must take part
in the review and approval of each request
for a grant or loan. The Reorganization
Plan will make it possible for applicants to
look exclusively to the river basin offices of
the Public Health Service in seeking infor-
mation or assistance in the abatement of
water pollution.

REORGANIZATION PLAN NO. 17

(Advance Planning and War Public Works)

Reorganization Plan No. 17 transfers two
of the programs of the General Services
Administration to the Housing and Home
Finance Agency. The first of these involves
the administration of advances to state and
local governments for the planning of public
works. This transfer is consistent with
recent action of the Congress which has
given the Housing and Home Finance
Agency an important function in the orderly
planning and development of the public
facilities and physical characteristics of
American communities.

The advance planning of non-Federal pub-
lic works was revived as an activity of the
Government of the United States by Public
Law 352, approved October 13, 1949. ^^
authorizes repayable advances to state and
local governments for the planning of a shelf

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[69] Mar. 13

Public Papers of the Presidents

of public works available both for emergen-
cies and to meet the growing needs of com-
munities. Within the limits of available
funds, Federal aid is extended to any state
or local government which applies for an
advance if the proposed project conforms to
the over-all plans approved by competent
state, local or regional authorities, if the ap-
plicant possesses the legal authority to pro-
ceed with construction, and if the financial
resources of the community are found to be
adequate to make the undertaking feasible.
Advances have been requested chiefly to aid
in the planning of water and sewer systems,
schools, urban streets and roads and miscel-
laneous public buildings. Both the intent of
the Act and the nature of the facilities
planned require that the Federal agency ad-
ministering Public Law 352 have an under-
standing of how advance planning can con-
tribute to community development.

The Housing Act of 1949 assigned to the
Housing and Home Finance Administrator
the responsibility for executing the slum
clearance and community development pro-
visions of the statute. The adequate ad-
ministration of this program requires that
attention be directed to the planning of
urban communities, including the various
public facilities needed to assure the inte-
grated development of project areas. The
Housing and Home Finance Agency must
maintain continuous liaison with local of-
ficials, it must appraise accurately and thor-
oughly the capacity of communities to fi-
nance the projects authorized by the Hous-
ing Act, and it must acquire a detailed
knowledge of the legal authority of each par-
ticipant to build various categories of public
works. These are essentially the kinds of
knowledge and relationships which are es-
sential to the successful administration of
advances for non-Federal public works.

The consolidation of the responsibility for
advance planning activities with slum clear-

ance and urban redevelopment functions will
make it possible to assure the integration of
two programs which are not only closely re-
lated in their objectives but now overlap to
some extent. A single responsible agency
will be able to assure that the authority under
both statutes will be used to the maximum
advantage of both the Federal Government
and the state and local public bodies which
seek to participate in the benefits.

The plan will also make possible the unifi-
cation of the administrative structure and
field organization needed to administer the
two programs. Moreover, the emergence
of a single community development agency
will make it possible for public bodies to
deal with fewer Federal oflScials in the ad-
vance planning of their public facilities, the
elimination of blighted areas, and the pro-
motion of well-balanced residential neigh-
borhoods. The plan will consequently lead
to improvements in one important sector
of Federal-state and Federal-local relations.

The second transfer provided for by
Reorganization Plan No. 17 relates to the
management and disposal of sewers, schools,
hospitals and other community facilities con-
structed under Title II of the Lanham Act
of 1940, as amended. Its effect will be to
consolidate these functions in the Housing
and Home Finance Agency, which is al-
ready responsible for over 95 percent of re-
maining Lanham Act properties. The fact
that approximately 30 percent of the war
public works still in the possession of the
General Services Administration are depend-
ent upon war housing projects managed by
the Housing and Home Finance Agency
further illustrates the closeness of relation-
ships between the current Lanham Act func-
tions of the two agencies.

An additional consideration in support of
the transfer is the evolution of the Housing
and Home Finance Agency as the unit of the
Federal Government best prepared to nego-

214

Harry S. Truman, ig^o

Mar. 13 [70]

tiate with local officials on matters affecting
a wide variety of community facilities — a
preparedness which will be further enhanced
by the transfer of advance planning func-
tions. The reorganization plan will thus
lead to improvements in the capacity of the
Government to manage and dispose of the
public facilities still in its possession in a
manner which will simultaneously protect its
interests and advance the development of
the communities in which the projects are
situated.

The transfer of these programs to the
agencies where they can be administered
with other related activities will lead to the

simplification of administrative arrange-
ments, the reduction of unwarranted delays,
and the curtailment of the duplication in-
herent in divided responsibility. The re-
sult will be greater ultimate benefits from
the execution of the programs. These con-
siderations, together with the beneficial ef-
fect which the reorganizations will have on
the General Services Administration, lead
me to commend Reorganization Plans 15,
16, and 17 to the Congress as important and
constructive steps in our program of man-
agement reform in the Executive Branch.

Harry S. Truman

note: For further messages on Reorganization Plans
15, 16, and 17, see Items 70-72.

70 Special Message to the Congress Transmitting Reorganization
Plan 15 of 1950. March 13, 1950

To the Congress of the United States:

I transmit herewith Reorganization Plan
No. 15 of 1950, prepared in accordance with
the Reorganization Act of 1949. The plan
transfers the functions of the General Serv-
ices Administration relating to public works
in Alaska and in the Virgin Islands to the
Department of the Interior. My reasons for
transmitting this plan are stated in an ac-
companying general message.

After investigation I have found and
hereby declare that each reorganization in-
cluded in Reorganization Plan No. 15 of
1950 is necessary to accomplish one or more
of the purposes set forth in section 2(a) of the
Reorganization Act of 1949.

The savings to be realized from the trans-
fers provided for in the plan cannot be pre-
dicted in detail at this time. The small size
and restricted character of the Virgin Islands
public works program will prevent large re-
ductions in administrative expenditures.
However, by placing the responsibility for

the activity in the department generally con-
cerned with the government and welfare of
the Islands, the plan will lead to a closer
integration of the public works program
with verified needs.

The Alaska public works program is new
and will continue to grow for some time.
As a result the overall costs of administration
will increase under any organizational ar-
rangements which may be established. The
concentration of responsibility in the Depart-
ment already charged with the execution of
related programs in Alaska and required by
law to approve all projects constructed under
the Alaska Public Works Act of 1949 should,
however, simplify relationships and lead to
more economical administration than would
otherwise be possible.

Harry S. Truman

note: Reorganization Plan 15 of 1950 is published
in the U.S. Statutes at Large (64 Stat. 1267) and in
the 1 949-1 953 Compilation of title 3 of the Code
of Federal Regulations (p. 1007). It became ef-
fective on May 24, 1950.

215

[7i] Mar. 13

Public Papers of the Presidents

71 Special Message to the Congress Transmitting Reorganization
Plan 16 of 1950. March 13, 1950

To the Congress of the United States:

I transmit herewith Reorganization Plan
No. 16 of 1950, prepared in accordance with
the Reorganization Act of 1949. The plan
transfers to the Federal Security Agency the
functions of the General Services Adminis-
tration relating to assistance to local school
districts and grants and loans for water pollu-
tion control projects. My reasons for trans-
mitting this plan are stated in an accompany-
ing general message.

After investigation I have found and
hereby declare that each reorganization in-
cluded in Reorganization Plan No. 16 of
1950 is necessary to accomplish one or more
of the purposes set forth in section 2(a) of
the Reorganization Act of 1949.

The transfer of the responsibility for mak-
ing payments to local school districts whose
operating deficits are due in part to Federal
activities is unlikely to result in an immediate
reduction in expenditures for the administra-
tion of the program. However, by placing
the function in the agency of the Govern-

ment best informed in matters of public
school administration and presendy charged
with the payment of other grants for educa-
tional purposes, the plan will provide addi-
tional assurance that the funds appropriated
for assistance to overburdened school dis-
tricts will be most advantageously expended.
The relative newness and expanding char-
acter of the water pollution control program
prevents the itemization of the reductions in
expenditures which will follow the consolida-
tion of responsibility for this activity. It is
expected that the elimination of overlapping
and the simplification of relationships which
will result from the transfer will make it
possible to administer grants and loans more
expeditiously and at lower costs per project
than can be done under the present division
of responsibility.

Harry S. Truman

note: Reorganization Plan i6 of 1950 is published
in the U.S. Statutes at Large (64 Stat. 1268) and in
the 1 949-1 953 Compilation of title 3 of the Code
of Federal Regulations (p. 1008). It became ef-
fective on May 24, 1950.

72 Special Message to the Congress Transmitting Reorganization
Plan 17 of 1950. March 13, 1950

To the Congress of the United States:

I transmit herewith Reorganization Plan
No. 17 of 1950, prepared in accordance with
the Reorganization Act of 1949. The plan
transfers the functions of the General Serv-
ices Administration relating to the advance
planning of non-Federal public works and
the management and disposal of certain war
public works to the Housing and Home Fi-
nance Agency. My reasons for transmitting
this plan are stated in an accompanying
general message.

After investigation I have found and
hereby declare that each reorganization in-
cluded in Reorganization Plan No. 17 is
necessary to accomplish one or more of the
purposes set forth in section 2(a) of the
Reorganization Act of 1949.

The first of the transfers provided for by
this plan will result in the more economical
administration of those activities of the Fed-
eral Government which are concerned with
the over-all planning and development of
communities. The concentration of respon-

216

Harry 5. Truman, ig^o

Mar. 13 [73]

sibility in a single agency will make it pos-
sible to so integrate administration as to
avoid duplication of technical staffs and to
simplify relationships with state and local
agencies. Moreover, by reducing the likeli-
hood that the two programs involved will
be administered at cross-purposes or in con-
flict with each other, it can be expected that
the money expended will achieve greater
benefits than would be likely under the pres-
ent distribution of responsibility. It is not,
however, possible to itemize the reduction
in expenditures which will result, chiefly
because both programs are of recent origin
and are still undergoing expansion.

The transfer of the war public works func-
tions will lead to modest savings by consoli-

dating the responsibility for the management
and disposal of all properties built or ac-
quired under the Lanham Act of 1940, as
amended, in the agency which already has
the greater part of the total job. The fact
that it will become possible to manage and
dispose of public facilities serving emergency
housing developments without the inter-
agency negotiation which is now necessary
will lead to economies, although they cannot
be itemized or predicted with exactness.

Harry S. Truman

note: Reorganization Plan 17 of 1950 is published
in the U.S. Statutes at Large (64 Stat. 1269) and
in the 1 949-1 953 Compilation of title 3 of the Code
of Federal Regulations (p. 1008). It became ef-
fective on May 24, 1950.

73 Special Message to the Congress Transmitting Reorganization
Plan 18 of 1950. March 13, 1950

To the Congress of the United States:

I transmit herewith Reorganization Plan
No. 18 of 1950, prepared in accordance with
the provisions of the Reorganization Act of
1949. The plan transfers to the Administra-
tor of General Services the functions of the
various Federal agencies with respect to
leasing and assigning general purpose space
in buildings and the operation, maintenance
and custody of office buildings. Since such
authority is already largely concentrated in
the General Services Administration with
respect to the District of Columbia, the plan
principally relates to the administration of
these functions in the field.

The transfers made by this plan will pro-
mote more economical leasing, better utiliza-
tion of building space, and more efficient
operation of Government-controlled office
buildings. They will effectuate the recom-
mendations of the Commission on Organi-
zation of the Executive Branch of the Gov-
ernment with respect to concentrating in

the General Services Administration the re-
sponsibility for space allotment and the op-
eration of Government buildings outside of
the District of Columbia. Likewise, they
will extend the principles laid down by the
Congress in enacting the Federal Property
and Administrative Services Act of 1949 to
another important area of Government-wide
administrative services — the administration
of Government office buildings and general
purpose building space in the field.

Within the District of Columbia, one
agency, the Public Buildings Service of the
General Services Administration, has long
had the operation and custody of most Gov-
ernment buildings and the leasing and as-
signment of space for executive agencies.
Thus, nearly all requests for building space
are handled by a single organization which
is responsible for seeing that agencies are
properly and efficiently housed. This ar-
rangement has proved its worth and has
repeatedly been approved by the Congress.

41-355— G5-

-17

217

[73] Mar. 13

Public Papers of the Presidents

Outside of the National Capital, however,
responsibility for the acquisition and con-
trol of building space and the operation of
Government buildings is v^idely diffused. A
variety of agencies operate and control gen-
eral purpose buildings. If quarters are not
available in Federal buildings, each agency
ordinarily does its ov^n leasing. As a result,
in some cases Federal agencies have con-
tracted for space at high rentals at the very
time that other agencies have been giving up
surplus low-cost space.

The assignment of space in Government-
owned buildings outside of Washington is
also divided among a number of agencies.
While the Public Buildings Service con-
structs a large part of the Government build-
ings, it operates and controls the assignment
of space in only a small proportion of them.
The Post Office Department operates and
allocates the space in post office buildings,
several hundred of which contain substan-
tial amounts of office space available for other
agencies. During and immediately after the
war several other Federal agencies acquired
office buildings in the field. As their activi-
ties have contracted, surplus space in many
of these structures has become available for
other uses.

This plan concentrates in the General
Services Administration the responsibility
for the leasing and assignment of what is
termed general purpose building space, that
is, space which is suitable for the uses of
a number of Federal agencies. It specifically
excludes space in buildings at military posts,
arsenals, navy yards, and similar defense
installations and space in hospitals, labora-
tories, factories and other special purpose
buildings.

Also, the plan excludes the Post Office
Department from the transfer of leasing au-
thority since the Department has a highly
developed organization for this purpose, and
it limits the transfer of space assignment

authority in post office buildings to the space
not occupied by the Department. Further,
it gives the needs of the Post Office Depart-
ment priority in the assignment of space in
post office buildings. Thus, the plan amply
safeguards the interests of the Post Office
Department while making it possible to
include the general office space in post office
buildings in any given city with other simi-
lar space under Federal control in planning
and executing an efficient program for hous-
ing Government agencies in that area.

In addition, the plan transfers to the Gen-
eral Services Administration the operation,
maintenance, and custody of office buildings
owned or leased by the Government, includ-
ing those post office buildings which are not
used predominandy for post office purposes.
This will make it possible to establish a single
organization for the operation and main-
tenance of Government office buildings in
principal cities in the field as has proved
desirable in the National Capital. Since
many post offices are in fact primarily large
office buildings, the plan includes in this
transfer the post office buildings which are
not used predominantly for post office pur-
poses. This will relieve the Post Office De-
partment of a considerable expenditure for
building operation and maintenance which
properly should not be charged against postal
revenues.

While the plan effects a broad transfer of
functions with respect to leasing and assign-
ment of space and the operation and main-
tenance of office buildings, it specifically
authorizes the Administrator of General
Services to delegate the performance of any
part of these functions to other agencies
subject to such regulations as he deems de-
sirable for economical and effective admin-
istration. In this the plan follows the pattern
adopted by the Federal Property and Ad-
ministrative Services Act of 1949 ^^^ other
branches of property management. In large

218

Harry S, Truman, ig^o

Mar. 13 [74]

urban centers where numerous Federal units
are located unified administration of space
activities by the General Services Adminis-
tration will normally be advantageous. On
the other hand, in the smaller communities it
will no doubt be desirable to delegate the
work back to the agencies directly affected,
to be carried on under standards laid down
by the Administrator of General Services.
The plan provides ample flexibility for work-
ing out the most effective administrative
arrangement for each type of situation.

The fundamental soundness and economy
of centralized administration of building
space have been amply demonstrated in the
National Capital. By virtue of unified con-
trol it has been possible since the war to ac-
complish far-reaching changes which have
consolidated agencies in much fewer loca-
tions, released many of the rented buildings,
and greatly reduced the cost of housing the
Government establishment. Similar pro-

cedures applied in the larger centers of field
activity should produce substantial savings.

After investigation, I have found and
hereby declare, that each reorganization con-
tained in this plan is necessary to accomplish
one or more of the purposes set forth in sec-
tion 2(a) of the Reorganization Act of 1949.

While it is not possible at this time to cal-
culate the reduction in expenditures which
will result from this plan, it can safely be
predicted that it will produce substantial sav-
ings. I am confident that this reorganization
plan will constitute a significant improve-
ment in Federal business practice and will
bring about an important increase in effi-
ciency in housing Government agencies.

Harry S. Truman

note: Reorganization Plan 18 of 1950 is published in
the U.S. Statutes at Large (64 Stat. 1270) and in
the 1 949-1 953 Compilation of title 3 of the Code
of Federal Regulations (p. 1009). It became ef-
fective on July I, 1950.

74 Special Message to the Congress Transmitting Reorganization
Plan 19 of 1950. March 13, 1950

To the Congress of the United States:

I transmit herewith Reorganization Plan
No. 19 of 1950, prepared in accordance with
the Reorganization Act of 1949. This re-
organization plan carries out a specific
recommendation of the Commission on Or-
ganization of the Executive Branch of the
Government by transferring from the Fed-
eral Security Agency to the Department of
Labor the Bureau of Employees' Compensa-
tion and the Employees' Compensation Ap-
peals Board and their functions. The
functions of the Federal Security Adminis-
trator with respect to employees' compensa-
tion are also transferred by the plan.

The reorganization plan is a further step
in achieving the general objective of the
Commission to strengthen the Department

of Labor by bringing within it labor func-
tions which over many years have been scat-
tered throughout the Executive Branch.

Last year by reorganization plan the Bu-
reau of Employment Security was transferred
to the Department of Labor. Today I am
also transmitting Reorganization Plan No.
19 which assigns to the Department of Labor
the responsibility for prescribing and en-
forcing standards, regulations, and pro-
cedures in order to coordinate and assure
consistent enforcement of labor standards
legislation applying to Federally financed or
assisted construction and public works. The
accompanying reorganization plan will fur-
ther consolidate allied programs of the Fed-
eral Government pertaining to employees
and employment.

219

[74] Mar. 13

Public Papers of the Presidents

The Bureau of Employees* Compensation
administers programs which compensate
workers and their dependents for death or
disabling injuries suffered in the course of
employment. These programs constitute
the Federal Government's system of work-
men's compensation and include the related
functions of accident prevention and safety.
Currently, there are four major groups of
employees covered by this system, including
2,000,000 Federal employees, 500,000 long-
shoremen and harbor workers, 250,000 in-
dustrial employees in the District of Colum-
bia and an estimated 100,000 employees of
private contractors located at overseas
United States bases. In 1949 these groups
of employees suffered over 200,000 injuries,
of which 30,000 resulted in claims for com-
pensation.

The Employees' Compensation Appeals
Board hears and finally decides appeals on
claims of employees covered by the Fed-
eral Employees' Compensation Act. Non-
Federal employees take appeals arising from
compensation claims directly to the District
courts.

This workmen's compensation system,
which is designed to mitigate the hardships
attendant upon the death or disabling in-
juries of employees growing out of their
employment, is clearly a labor function and
is closely related to other programs of the
Department of Labor.

For many years the Department of Labor
has taken leadership in promoting standards
for workmen's compensation programs
throughout the country. It is most appro-
priate that the agency promoting high stand-
ards for workmen's compensation programs
throughout the several states should likewise
administer the Federal Government's work-
men's compensation programs.

An accident prevention program is always
a necessary adjunct of a workmen's com-
pensation system. The Department of

Labor has the primary responsibility in the
Federal Government for developing and pro-
moting programs for the prevention and
elimination of industrial hazards. This
activity is primarily carried out by the Bu-
reau of Labor Standards through the estab-
lishment of safety standards of general appli-
cation throughout industry. This Bureau is
also the focal point for making effective the
Government's Nation-wide conferences on
industrial safety. A related activity is the
responsibility of the Wage and Hour and
Public Contracts Divisions of the Depart-
ment to enforce the safety provisions of the
Walsh-Healey Public Contract Act with
respect to working conditions on certain
public contracts.

The Secretary of Labor also has special
responsibilities relating to safety for Federal
employees, having served as Chairman of
the Policy Board of the Interdepartmental
Safety Council since its inception. The
Bureau of Labor Standards has provided the
necessary staff work for the Council, and
has assisted the Secretary of Labor in carry-
ing out his broad area of interest in Federal
safety programs.

An integral part of the Department's ac-
tivities for effective programs of workmen's
compensation and industrial safety has been
the compilation of accident statistics by the
Bureau of Labor Statistics. Effective admin-
istration of workmen's compensation or
safety standards requires the use of that
Bureau's information on work injuries and
accident causes, for this information affords
important guidance in the establishment of
equitable compensation benefits and in the
formulation of effective safety standards.

Prior to 19 16, the Federal system of work-
men's compensation was carried out under
the Secretary of Labor, or his predecessor
the Secretary of Commerce and Labor.
From 19 16 to 1946 administration of this
system was vested in an independent Em-

220

Harry S. Truman, ig^o

Mar. 13 [75]

ployees' Compensation Commission. Due
to the greatly increased complexity of the
Federal Government, it was imperative that
the independent status of that Commission
be eliminated and that it be placed within
one of the major constituents of the Execu-
tive Branch. Therefore, in 1946, the Em-
ployees' Compensation Commission was
abolished and its functions were transferred
to the Federal Security Agency.

Since 1946, new conditions have arisen
which make it desirable to change the loca-
tion of the Federal workmen's compensation
system. Recently, through the 1949 amend-
ments to the Federal Employees' Compensa-
tion Act, the Bureau of Employees' Compen-
sation was given increased responsibilities,
with respect to accident prevention and
safety. Furthermore, in 1949, responsibility
for unemployment compensation was as-
signed to the Department of Labor. Work-
men's compensation, like unemployment
compensation, is a program designed to al-
leviate hazards arising in employment.
Since functions relating to both employment
and employment conditions are performed
by the Department of Labor, compensation
for injury suffered in employment, like com-
pensation for unemployment, should also be
a function of the Department of Labor.

There are not transferred by the provisions
of this reorganization plan (i) any function
of the Public Health Service, (2) any func-
tion of the Federal Security Agency or the
Federal Security Administrator under the

Vocational Rehabilitation Act, as amended
(including the function of assuring the de-
velopment and accomplishment of state re-
habilitation plans affecting beneficiaries
under the Federal Employees Compensation
Act), nor (3) the function of developing or
establishing rehabilitation services or fa-
cilities. These responsibilities are retained
in the Federal Security Agency. This pro-
vision will preclude the necessity for estab-
lishing any duplicating facilities or services.

After investigation, I have found and
hereby declare that each of the reorganiza-
tions included in Reorganization Plan No. 19
of 1950, is necessary to accomplish one or
more of the purposes set forth in section 2(a)
of the Reorganization Act of 1949.

It is probable that a reduction of expendi-
tures will result from the reorganizations in-
cluded in this plan, as well as from greater
efficiency of administration. An itemiza-
tion of these reductions in advance of actual
experience under this plan is not practicable.

This reorganization is another link in the
program to strengthen the Department of
Labor. It will result in the accomplishment
of optimum efficiency and is in the interest
of the most effective organization of the
Government.

Harry S. Truman

note: Reorganization Plan 19 of 1950 is published
in the U.S. Statutes at Large (64 Stat. 1271) and in
the 1949-1953 Compilation of title 3 of the Code
of Federal Regulations (p. 10 10). It became ef-
fective on May 24, 1950.

75 Special Message to the Congress Transmitting Reorganization
Plan 20 of 1950. March 13, 1950

To the Congress of the United States:

I transmit herew^ith Reorganization Plan
No. 20 of 1950, prepared in accordance with
the provisions of the Reorganization Act of
1949. This plan transfers from the Secretary
of State to the Administrator of General

Services a number of functions w^hich have
no connection w^ith foreign affairs but bear
a close relation to the archival and records
functions of the General Services Adminis-
tration.
Since its establishment in 1789 the De-

221

[75] Mar. 13

Public Papers of the Presidents

partment of State has performed certain
routine secretarial and record-keeping func-
tions for the Federal Government which are
entirely extraneous to its basic mission with
respect to the conduct of foreign relations.
While these activities do not properly belong
in the Department, they were assigned to it
and continued under its jurisdiction for want
of an appropriate agency for their perform-
ance. At present these functions consist of
the preservation and publication of laws, the
preparation and publication of the Statutes
at large, the certification and publication of
Constitutional amendments, the receipt and
preservation of certificates of Presidential
Electors and of electoral votes, and the com-
pilation and publication of Territorial papers.
Through The National Archives and Rec-
ords Service the General Services Adminis-
tration is especially staffed and equipped for
the conduct of activities of these types. It is
the principal custodian of the official records
of the Government. Under the Federal
Register Act and the Administrative Pro-
cedure Act, it preserves and publishes in the
Federal Register the executive orders, procla-
mations, and other principal executive docu-
ments and it codifies and publishes the rules
and regulations promulgated by the various
departments and agencies. This work is
generally similar in nature to, and much
greater in volume than, that performed by
the Department of State with respect to Con-
stitutional amendments, laws, and proclama-
tions. Consequently, the consolidation of
these activities of the State Department with
the archival and records activities of the Gen-
eral Services Administration should make
for greater efEciency and economy. The
plan, however, does not transfer the custody
and publication of treaties and international
agreements since they are matters of special
concern to the Department of State and it is
the agency most competent to edit such
documents.

The handling of the certificates of Presi-
dential Electors and the compilation and
publication of Territorial papers also more
appropriately belong in the General Services
Administration. The first is largely a mat-
ter of record-keeping and the second of
archival research. The preparation of the
Territorial papers involves the compilation
and editing of official documents of the vari-
ous Territories formerly existing within the
United States. The greater part of this ma-
terial is now in the National Archives and
the work involved is generally similar to
that being performed by it with respect to
other groups of public records.

In addition, the plan abolishes two statu-
tory duties of the Secretary of State which
have become obsolete. The first is the duty
of procuring copies of all State statutes as
provided in the Act of September 23, 1789
(R.S. 206). Inasmuch as the Library of
Congress now has a complete collection of
the State laws, it is no longer necessary for
the Department of State to maintain a com-
plete collection. The second is the require-
ment, imposed by the Act of July 31, 1876
(19 Stat. 105), as amended, that the Sec-
retary of State publish proclamations and
treaties in a newspaper in the District of Co-
lumbia. This is now unnecessary since
proclamations are published in the Federal
Register and treaties are made available cur-
rently in slip form in the Treaties and other
International Acts Series.

After investigation I have found and
hereby declare that each reorganization in-
cluded in this plan is necessary to accomplish
one or more of the purposes set forth in
section 2(a) of the Reorganization Act of
1949.

The transfers provided by this plan will
relieve the State Department of a number of
functions that have no relation to its primary
purpose and place them in an agency espe-

222

Harry S. Truman, ig^o

Mar. 13 [76]

daily designed for the performance of such
activities. Until these functions are incor-
porated in the operations of the General
Services Administration, it vv^ill not, of
course, be practicable to determine the econ-
omies attributable to their transfer, but it is
reasonable to expect modest yet vv^orthv^hile

savings to be achieved.

Harry S. Truman

note: Reorganization Plan 20 of 1950 is published
in the U.S. Statutes at Large (64 Stat. 1272) and
in the 1 949-1 953 Compilation of title 3 of the Code
of Federal Regulations (p. loii). It became ef^
fective on May 24, 1950.

76 Special Message to the Congress Transmitting Reorganization
Plan 21 of 1950. March 13, 1950

To the Congress of the United States:

retransmit herevi^ith Reorganization Plan
No. 21 of 1950, prepared in accordance with
the provisions of the Reorganization Act of
1949. This plan effects a basic reorganiza-
tion of the functions of the United States
Maritime Commission along the lines rec-
ommended by the Commission on Organiza-
tion of the Executive Branch of the Govern-
ment.

Within the last three years three different
bodies have studied the administration of the
Maritime Commission. All have concluded
that the operating deficiencies of the agency
arise from inappropriate and unsound orga-
nization and that a fundamental reorganiza-
tion is essential. The first of these bodies,
the President's Advisory Committee on the
Merchant Marine, in 1947, stated: "It ap-
pears to the Committee that the organization
structure of the Maritime Commission as
set up in the Merchant Marine Act of 1936
is wholly inadequate for the efficient conduct
of the multitude of diverse activities for
which the Maritime Commission is now
responsible. The deficiencies of the statu-
tory organization for administrative action
are regarded by the Committee to be the
most serious obstacle standing in the way of
the development of the Merchant Marine of
this country." Similarly, the survey of the
Maritime Commission in 1948 for the Senate
Conmiittee on Expenditures in the Executive

Departments concluded that "The funda-
mental weakness of the Maritime Commis-
sion, as it is now constituted, lies in its
prescribed organization." On the basis of in-
vestigations of the Maritime Commission by
two of its task forces, the Commission on
Organization of the Executive Branch stated:
"It is an anomaly that a regulatory commis-
sion should also conduct the executive func-
tion of managing a huge business; that ex-
ecutive functions should be carried on by
an agency that is not subject to presidential
direction; that executive functions should be
carried on by a full-time board ..." While
the recommendations of the various studies
differ in some details, they agree on prin-
ciples and on the main features of reorgani-
zation.

Basically, the administrative difficulties of
the Maritime Commission have arisen, as all
these studies agree, from the fact that the
Commission is responsible for performing
two fundamentally different types of func-
tions which call for different types of organi-
zation. These two classes of functions are
(a) regulatory and (b) operating and pro-
motional. Under various acts the Commis-
sion regulates rates and services of water
carriers, passes on agreements among car-
riers, and protects shippers against unfair
and discriminatory practices. This type of
activity requires the deliberation and inde-
pendence of judgment which a board or

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[y6] Mar. 13

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commission is especially well designed to
provide. But at the same time the G>mmis-
sion is charged with the conduct of a variety
of large and costly promotional and business-
type programs demanding the prompt and
vigorous administration for which experi-
ence both in Government and in private
enterprise has demonstrated that a single
executive is essential.

The Maritime Commission has charge of
the construction of merchant vessels for sub-
sidized operators and for government ac-
count. It owns and maintains the largest
merchant fleet in the world, consisting of
2,200 vessels aggregating more than 22,000,-
000 dead weight tons. It charters and sells
ships and in time of war or national emer-
gency requisitions and operates vessels for
the Government. It grants construction and
operating differential subsidies to private
shipping companies to maintain an active
privately operated American merchant
marine. It makes loans and insures mort-
gages to assist carriers in acquiring new
vessels, and it conducts programs for train-
ing officers and seamen for the merchant
marine. For the present fiscal year the per-
formance of these functions will involve the
expenditure of approximately $162,000,000
and the direction of an organization of 5,500
employees. In short, the administration of
the Maritime Commission is a vast business
undertaking. Moreover, the work of the
Commission affects significandy the interests
of both business and labor in the mainte-
nance of a sound maritime industry.

Further than this, many of the activities
of the Maritime Commission are closely re-
lated to other programs of the Government
and have to be coordinated with them. In
the construction of a subsidized ship the
Commission must cooperate with the Coast
Guard on those features of design, materials,
and equipment which affect the safety of the
vessel and with the Navy on those which

especially affect the use of the ship for na-
tional defense. Furthermore, the whole pro-
gram of subsidized ship construction needs
to be adjusted to the plans and requirements
for national defense. At the same time the
Commission's programs for the development
of the merchant marine must be coordinated
with our foreign policy and with Federal
programs with respect to other branches of
transportation.

While an independent commission is an
appropriate instrument for the performance
of the regulatory functions of the Maritime
Commission, such an agency obviously is not
the type required to provide strong and ef-
ficient administration of the large operating
programs now entrusted to the Commission
or to obtain the needed coordination with
other activities of the Executive Branch.
This fact is amply demonstrated by the ad-
ministrative difficulties and the complicated
problems of coordination encountered in the
operation of the Commission since the war
and by the necessity of transferring a large
part of its functions to the War Shipping
Administration, headed by a single executive,
during the war.

Briefly, this reorganization plan provides
for a small Federal Maritime Board and a
Maritime Administration in the Department
of Commerce to perform the functions of
the Maritime Commission, and abolishes the
existing Commission. It transfers to the
Board the regulatory functions of the Com-
mission and definitely guarantees the inde-
pendence of the Board in the performance of
these functions. In addition, it vests di-
rectly in the Board the determination and
award of construction and operating differ-
ential subsidies. In the performance of its
subsidy functions the Board will be subject
to general policy guidance by the Secretary
of Commerce. The Board, however, and it
alone, will determine to whom subsidies shall
be granted and will make and award the sub-

224

Harry S. Truman, ig$o

Mar. 13 [76]

sidy contracts. Its actions therein will be
conclusive and will not be subject to modi-
fication by any other agency or officer of the
Department of Commerce. The other func-
tions of the Maritime Commission, including
carrying out the subsidy agreements made
by the Board and administering the various
operating programs, are transferred to the
Secretary of Commerce for administration
through the Maritime Administration.
Thus, the plan provides for each of the two
types of functions now vested in the Mari-
time Commission the type of organization
best suited to its performance. At the same
time, the plan will facilitate coordination of
maritime policies and programs with other
related policies and programs.

The division of functions under this plan
conforms direcdy to the recommendations
of the Commission on Organization of the
Executive Branch of the Government.
While the award of subsidies is a promo-
tional rather than a regulatory function and
might logically be assigned to the Maritime
Administration instead of the Board, its
impact on the shipping industry and on in-
dividual carriers is such as to make desirable
the deliberation and combined judgment
of a board. Accordingly, I have adhered to
the recommendation of the Commission on
Organization that this function be vested
in a multiple body rather than a single of-
ficial. Likewise, in line with the recom-
mendations of the Commission, the plan
assigns the determination of the over-all
route pattern to the Secretary of Commerce.

The Maritime Board will consist of three
members appointed by the President with
the consent of the Senate for overlapping
terms of four years. Not more than two of
the members can be of the same political
party. The Board, therefore, will be a
smaller and more wieldy body which can
function with greater expedition and effi-
ciency than the existing five-member Com-

mission. The Chairman will be designated
by the President from the members of the
Board and will be, ex officio, the Maritime
Administrator and as such the head of the
Maritime Administration. The plan also
provides for a Deputy Maritime Admin-
istrator appointed by the Secretary of Com-
merce under the classified civil service.
After investigation I have found, and hereby
declare, that by reason of the reorganiza-
tions made by this plan, it is necessary to
include in the plan provisions for the ap-
pointment and compensation of the members
of the Federal Maritime Board and for the
appointment of the Deputy Maritime Ad-
ministrator.

In making the Chairman of the Federal
Maritime Board the Maritime Administra-
tor, the plan adopts an arrangement sub-
stantially similar to that which prevailed
during the war, when the same individual
served as Chairman of the Maritime Com-
mission and head of the War Shipping Ad-
ministration. This arrangement will have
important advantages. It will facilitate co-
operation between the Board and the Admin-
istration of matters of concern to both.
Also, it will avoid dividing the personnel of
the Maritime Commission, since the Chair-
man of the Board will supervise the person-
nel assisting it in the performance of its
functions, as is now the case in the Maritime
Commission, and in his capacity as Admin-
istrator he will have charge of the personnel
carrying on the work of the Maritime Ad-
ministration. The plan provides for the
joint operation of the officers and employees
under the Administrator and Chairman as
a single body of personnel. The mainte-
nance of a unified stafi is essential for ef-
ficient and economical administration be-
cause many of the technical and professional
personnel, such as ship designers and at-
torneys, now assist the Maritime Commis-
sion on problems of subsidy determination

41-355—65 -18

225

[y6] Mar. 13

Public Papers of the Presidents

and also participate in the subsequent admin-
istration of subsidy agreements and in per-
forming nonsubsidy functions.

The inclusion of the new Board in the De-
partment of Commerce will permit the use
of the administrative services of the Depart-
ment. More important, it will eliminate the
necessity of splitting the personnel of the
Maritime Commission between the Depart-
ment and an outside agency. In addition,
it will relieve the President of having to
handle relations with a separate maritime
agency.

In establishing the Department of Com-
merce the Congress provided in the Organic
Act of the Department that "It shall be the
province and duty of said Department to
foster, promote, and develop the foreign and
domestic commerce, . . . shipping, . . . and
the transportation facilities of the United
States." Over the years, however, trans-
portation functions have become widely scat-
tered throughout the Executive Branch.
As a result, intelligent planning and budget-
ing of Federal transportation activities
and the necessary coordination of transporta-
tion programs have become extremely diffi-
cult or impossible. The transfer of the func-
tions of the Maritime Commission to the
Department of Commerce will constitute a
major step in correcting this condition.

Without question the Department of Com-
merce is now the appropriate center for trans-
portation programs. It contains the Civil
Aeronautics Administration — the major op-
erating and promotional agency of the Gov-
ernment in the field of air transportation —
and the Weather Bureau and the Coast and
Geodetic Survey, which provide vital services
to transportation. As a result of Reorganiza-
tion Plan No. 7 of 1949, it now also includes
the Bureau of Public Roads — the leading
promotional agency dealing with land trans-
portation. Also, it has the Inland Water-

ways Corporation in the field of water trans-
portation. The transfer of the functions of
the Maritime Commission will bring into the
Department the principal water transporta-
tion agency of the Government. These
actions will go a long way toward the estab-
lishment of a sound and effective organiza-
tion for the operating and promotional pro-
grams of the Government relating to
transportation.

It is my purpose to look to the Secretary
of Commerce for leadership with respect to
transportation problems and for the develop-
ment of over-all transportation policy within
the Executive Branch. Because of the mag-
nitude and importance of the transportation
functions transferred to the Department of
Commerce by this reorganization plan, I
have found and hereby declare that it is
necessary to strengthen the top administra-
tive structure of the Department by provid-
ing for the appointment and compensation
of a new Under Secretary of Commerce for
Transportation. This will make available
an officer of the highest rank to assist the
Secretary in supervising the varied and com-
plex transportation programs of the Depart-
ment and providing central leadership in
transportation matters. With the many re-
sponsibilities of the Secretary of Commerce
in other areas, the creation of this office is
essential to enable him properly to fulfill his
obligations with respect to transportation.

After careful investigation I have found
and I hereby declare that each of the re-
organizations contained in this reorganiza-
tion plan is necessary to accomplish one or
more of the purposes set forth in section 2(a)
of the Reorganization Act of 1949. The
rates of compensation fixed by the provisions
of the reorganization plan for the Under
Secretary of Commerce for Transportation,
the Chairman and the other two members of
the Federal Maritime Board are, respectively,

226

Harry S. Truman, ig^o

Mar. 15 [77]

those which I have found to prevail in respect
of comparable officers in the Executive
Branch of the Government.

In summary, the reorganizations provided
by this plan will have the following principal
advantages: They will provide an efficient
organization headed by a single responsible
official to administer the large operating and
business-type programs of the Maritime
Commission. At the same time, they will
preserve the benefits of a bi-partisan board
for the performance of the regulatory func-
tions of the Commission and the determina-
tion of subsidies. They will reduce the
number of agencies reporting directly to the
President and simplify the over-all man-
agement of the Executive Branch. In doing
so, they will provide more adequate ma-
chinery for supervising the administration
of the maritime programs and will facilitate

their coordination with related policies and
programs of the Executive Branch. Finally,
they will accomplish a major advance in the
development of an effective organization of
Federal transportation programs in accord
with the recommendations of the Commis-
sion on Organization of the Executive
Branch of the Government. While it is im-
possible to estimate in advance the savings
which will be brought about by this plan,
the improvements in administrative efficiency
resulting from it should produce substantial
reductions in expenditures for the programs
transferred by the plan.

Harry S. Truman

note: Reorganization Plan 21 o£ 1950 is published
in the U.S. Statutes at Large (64 Stat. 1273) and in
the 1 949-1 953 Compilation of title 3 of the Code
of Federal Regulations (p. 1012). It became ef-
fective on May 24, 1950.

77 Statement by the President on the National Capital
Sesquicentennial Commission. March 15, 1950

I HAVE examined reports on the progress
made by the National Capital Sesquicenten-
nial Commission and have been encouraged
to note that many of the difficulties caused by
the long delay in obtaining an appropriation
for the work of the Commission are now
being surmounted. Because of lack of funds,
the Commission was faced with the difficult
task of creating a celebration of major pro-
portions in less than a third of the time
usually available for such purposes. The
Commission's work has now reached a point
at which a number of its plans for a suitable
observance of the sesquicentennial anniver-
sary are ready for actual operation.

It has been found necessary to postpone
the Freedom Fair for a year. Certain legal
questions must be settled, and a suitable site
must be chosen, before a final decision can be

reached on the eventual size and scope of the
fair. I hope that all these problems will soon
be resolved; for the Freedom Fair can, by
its demonstration of the growth of our Na-
tion under free enterprise, do much to show
to the world the strength of our institutions.

The remainder of the plans for the ob-
servance of the 150th anniversary of the es-
tablishment of the Federal Government in
the city of Washington are well advanced.
Collectively, they will provide a stimulating
and interesting program, one which should
attract many thousands of our citizens to
Washington to join with us in the celebra-
tion and help to give it the truly national
character it should have.

The work of the Commission deserves the
full support of the citizens of Washington.
I am sure that they will welcome this oppor-

227

[77] Mar. 15

Public Papers of the Presidents

tunity to manifest their faith in our govern-
mental system, of which the city of Wash-
ington is a noble symbol.

note: On April 12, 1950, the President signed Proc-
lamation 2881 "National Capital Sesquicentennial"
(3 CFR, 1949-1953 Comp., p. 54).

In a telegram dated May 10, 1950, Carter Barron,
Executive Vice Chairman o£ the Sesquicentennial
Commission, informed the President that the Com-
mission's Executive Committee had decided to rec-
ommend that the proposed Freedom Fair be
abandoned.

78 Letter to the Chairman, House Committee on Foreign
Affairs, Urging Enactment of the Foreign
Assistance Act. March 25, 1950

My dear Mr, Chairman:

I understand that the House of Repre-
sentatives will soon consider the Foreign
Assistance Act of 1950. I believe the Con-
gress of the United States has an opportunity
to strike a major blov^ for peace on behalf
of people everywhere by taking rapid and
favorable action on this legislation.

Approval of this measure will give re-
newed hope and vigor to people everywhere
who are working to achieve their economic
independence and maintain their political
freedom. Passage of this Act will strengthen
all nations threatened with intimidation,
subversion, or direct aggression.

It is in the interest of each American that
there be a far greater measure of well-being
in other lands. Other countries must be able
to produce and procure from us and each
other those things which will enable their
people to have the food, health, and housing
necessary to maintain economic and political
stability.

Poverty, misery, and insecurity are the con-
ditions on which communism thrives. Free-
dom-loving peoples can eliminate these con-
ditions only by joining their knowledge and
resources in a great cooperative effort.

The Foreign Assistance Act will authorize
continued economic aid to the Marshall Plan
countries in Europe and to the Republic of
Korea to enable them, through their own
efforts, to establish self-supporting econo-

mies. It will authorize aid where needed to
those free countries in the general area of
China whose survival is threatened by the
imminent danger of communist infiltration.
This Act will provide authority for a major
effort to assist the peoples of southeast Asia.

It will provide for participation in the
United Nations effort to solve the serious
problem of the Palestine refugees. Satis-
factory solution of this problem is funda-
mental to permanent peace in the Near East.

The Act will authorize the carrying for-
ward of the vital program of technical and
other assistance to under-developed coun-
tries which was the fourth point in my in-
augural address. This will provide the
peoples in under-developed areas of Asia,
the middle East, and other parts of the world
the hope and the tools they need to achieve
and maintain real freedom for themselves.

The program called for by this Act is the
minimum consistent with the interest of the
United States and our efforts to achieve a
peaceful world. Failure to enact it in its full
amount would do irreparable damage. We
cannot live isolated in relative wealth and
abundance. We cannot ignore the urgent
problems of other peoples or threats to their
independence.

These measures are not acts of charity.
Neither are they a waste of the resources of
the United States. They are, indeed, the
keystone of our protection against the de-

228

Harry S. Truman, i^^o

Mar. 28 [79]

struction of another war and against the
terrible weapons of this atomic age. Our
armed forces can afford us a measure of de-
fense, but real security for our Nation and
all the rest of mankind can come only from
building the kind of world where men can
live together in peace.

The United States turned its back upon
the rest of the world after the first world war.
Some twenty years later, we found that we
had to fight another world war. We cannot
afford to follow that course again. We will
save nothing if we ignore the needs of other
nations now only to find that the result is
World War III.

Passage of this Act will enable us in com-
pany with other nations to move a long step

forward in our offensive for freedom and
for peace. It will bring appreciably nearer
the goal all freedom-loving peoples seek —
a peace where all nations live in equality
and mutual respect. It will be tangible evi-
dence of our determination to achieve this
kind of peace — evidence which will be
understood by every nation in the world.
Sincerely yours,

Harry S. Truman

[Honorable John Kee, Chairman, Committee on
Foreign Affairs, House of Representatives, Wash-
ington, D.C.]

note: For the President's statement upon signing
the Foreign Economic Assistance Act of 1950, see
Item 154.

The letter was released at Key West, Fla.

79 Letters Regarding Disclosure of Confidential Files on
Employee Loyalty. March 28, 1950

Dear Senator Ty dings:

This is in reply to your letter of March 22,
1950, in which you have asked for the pro-
duction before your Subcommittee of the
investigative files relating to Government
employees who are or have been employed
in the Department of State and against
whom charges of disloyalty have been made
before your Subcommittee by Senator Mc-
Carthy. The question raised by your re-
quest is one of grave concern, and I have
given very careful consideration to the re-
sponse contained herein.

In March of 1948, I issued a Directive to
all officers and employees in the Executive
Branch of the Government, directing that
all reports, records, and files relating to the
employee loyalty program be kept in strict
confidence, even in instances where sub-
poenas were received. As you know, this
Directive was clearly within the power of
the President, and I issued it only after the
most careful consideration, and after I had

satisfied myself beyond any doubt that any
other decision would have resulted in the
collapse of the loyalty program.

At that time, I issued a release in which
I pointed out the long-standing precedents
regarding the production of confidential files
and the reasons for my decision. I referred,
among other things, to a letter from former
Attorney General Robert H. Jackson, dated
April 30, 194 1, to the Chairman of the House
Committee on Naval Affairs, declining to
furnish that Committee with certain reports
of the Federal Bureau of Investigation,
which letter was written with the approval
and at the direction of President Roosevelt.
That letter forcefully pointed out the serious
consequences that would have resulted from
compliance with the request of the House
Naval Affairs Committee.

Among other things, Attorney General
Jackson stated:

"Moreover, disclosure of the reports would
be of serious prejudice to the future useful-

229

[79] Mar. 28

Public Papers of the Presidents

ness of the Federal Bureau of Investigation.
As you probably know, much of this in-
formation is given in confidence and can only
be obtained upon pledge not to disclose its
sources. A disclosure of the sources v^ould
embarrass informants — sometimes in their
employment, sometimes in their social rela-
tions, and in extreme cases might even en-
danger their lives. We regard the keeping
of faith v^ith confidential informants as an
indispensable condition of future efiSciency.

"Disclosure of information contained in
the reports might also be the grossest kind of
injustice to innocent individuals. Investi-
gative reports include leads and suspicions,
and sometimes even the statements of ma-
licious or misinformed people.

"Even though later and more complete re-
ports exonerate the individuals, the use of
particular or selected reports might constitute
the grossest injustice, and we all know that
a correction never catches up with an ac-
cusation."

These three elements — the serious preju-
dice to the effectiveness of the Federal Bu-
reau of Investigation as an investigative
agency, the resulting embarrassment and
danger to confidential informants, and injus-
tice and unfairness to innocent individuals —
led me to the inescapable conclusion that the
single most important element in an effective
and at the same time just and fair loyalty pro-
gram was the preservation of all files in
connection therev^th in the strictest confi-
dence. I cannot over-emphasize this point.

During the last month, I have been re-
examining with utmost care this entire prob-
lem, and in this connection I have asked the
Attorney General, the Director of the Federal
Bureau of Investigation, and Mr. Seth Rich-
ardson, Chairman of the Loyalty Review
Board, to give their careful consideration to
this matter. They have unanimously ad-
vised me that disclosure of loyalty files would
be contrary to the public interest, and would

do much more harm than good. The Di-
rector of the Federal Bureau of Investigation
in a report to the Attorney General has out-
lined the very serious consequences that
would result from any such disclosure. The
Director of the Federal Bureau of Investiga-
tion stated:

1. The public disclosure of F.B.I, reports
will reveal investigative procedures and
techniques. If publicized, criminals, foreign
agents, subversives, and others would thus
be forewarned and seek ways and means to
carry out their activities, thus avoiding de-
tection and hampering the efficiency of an
investigative agency. The underground
operations of criminals and subversives al-
ready are most difficult of detection, and I do
not believe the security of the Nation would
be furthered by applying any additional
shackles to the F.B.I.

2. For the last 25 years, the F.B.I, has rep-
resented to the American public that the
F.B.I, would maintain their confidences.
To make public F.B.I, reports would be to
break confidences, and persons interviewed
in the future might be even more reluctant
to furnish information. In recent months,
on numerous occasions, some citizens, shirk-
ing their responsibilities, have refused to fur-
nish information on the grounds that it
might be misused, and have gone so far as to
decline to furnish information, even in ap-
plication investigations, claiming they would
do so only if forced by a subpoena.

3. A public disclosure of F.B.I, reports
would reveal the identity of sources of in-
formation, and in some cases, at least, would
place in jeopardy the lives of confidential
sources of information.

4. Disclosure of information contained in
F.B.I, reports might result in an injustice
to innocent individuals, who find themselves
entwined in a web of suspicious circum-
stances, which can be explained only by
further investigation, and disclosures might

230

Harry S. Truman, ig^o

Mar. 28 [79]

be made under circumstances which would
deny the aggrieved the opportunity to pub-
licly state their positions.

5. A public disclosure could warn persons
whose names appear in F.B.I, reports of the
investigation, and serve as an effective means
of enabling them to avoid detection, to ap-
proach witnesses, to bring about the destruc-
tion of evidence, or permit them to flee the
country.

6. Public disclosure of F.B.I, reports could
contribute to blackmail of persons investi-
gated, or could result in degrading persons
who have made a mistake or fallen prey to
false propaganda.

7. Disclosure might reveal highly re-
stricted information vital to the national se-
curity and of considerable value to a foreign
power.

8. F.B.I, reports set forth full details se-
cured from a witness, and if disclosed, could
be subject to misinterpretation, quoting out
of context, or used to thwart truth, distort
half-truths, and misrepresent facts.

It is my desire, however, that the charges
of disloyalty made before your Subcommittee
be given the most thorough and complete
investigation, and it is my purpose to co-
operate with your Subcommittee to the great-
est extent possible, bearing in mind at all
times my responsibility to take care that the
investigative activities and efficiency of the
Federal Bureau of Investigation and other
investigative agencies remain unimpaired,
that innocent people — ^both those under in-
vestigation and those who have provided
information — not be unnecessarily injured,
and that the effectiveness of the employee
loyalty program as a whole not be interfered
with.

I am, therefore, asking Mr. Seth Richard-
son, Chairman of the Loyalty Review Board,
to have the Board arrange for a complete
and detailed review, as soon as possible, of
the cases in which charges of disloyalty have

been made before your Subcommittee (in-
cluding cases heretofore reviewed by the
Board), and am asking him to give me a
full and complete report after review.

This review will include reports of loyalty
investigation made by the Federal Bureau
of Investigation, and the files of the State
Department and the Civil Service Commis-
sion relating to these cases, as well as all
other evidence of disloyalty made available
to the Loyalty Review Board, including, of
course, any evidence produced before your
Subcommittee.

Upon receipt of Mr. Richardson's report,
I will advise your Subcommittee further.

For your information, I am attaching
hereto a list of the Members of the Loyalty
Review Board.

Sincerely yours,

Harry S. Truman

[Honorable Millard E. Tydings, United States Senate,
Washington, D.C.]

Dear Mr. Richardson:

I am enclosing herewith a copy of a letter
which I am sending to Senator Tydings,
with reference to the investigation now being
conducted by the Subcommittee of the Sen-
ate Committee on Foreign Relations of
Government employees who are or have been
employed in the Department of State and
against whom charges of disloyalty have been
made. I believe the letter is self-explanatory.

In accordance with the letter, I would ap-
preciate it if the Loyalty Review Board
would arrange for a complete and detailed
review, as soon as possible, of the cases in
which charges of disloyalty have been made
before Senator Tyding's Subcommittee.
This review should include cases which have
heretofore been reviewed by the Board, and
should include a review of reports of loyalty
investigations made by the Federal Bureau
of Investigation and files of the State Depart-
ment and the Civil Service Commission re-

231

[79] Mar. 28

Public Papers of the Presidents

lating to such cases, as well as a review of all
other evidence of disloyalty made available
to you, including of course any evidence pro-
duced before the Subcommittee.

Would you please furnish me with a full
and complete report after completion of the
Board's review?

Sincerely yours,

Harry S. Truman

[Honorable Seth W. Richardson, Chairnian, Loyalty
Review Board, United States Civil Service Commis-
sion, Washington, D.C.]

note: Senator Tydings, in his letter to the President
of March 22, requested that his committee be per-
mitted to examine the files of the State Department,
the Loyalty Board, and the FBI "as to vs^hat these
files contain concerning nine persons named by
Senator McCarthy in opening hearings and eighty
persons named by number against whom charges of
one kind or another were made by Senator McCarthy
in a speech on the Senate floor on February 20,
1950."

For a further letter to Senator Tydings, dated
April 3, again refusing to disclose confidential in-
formation on employee loyalty, see Item 82.

Senator Tydings' subcommittee report states that
on May 4, "upon ascertaining that the cases with
respect to the individuals named by Senator Mc-
Carthy were identical with individuals whose loyalty
files had previously been reviewed by four com-
mittees of the Eightieth Congress, the President . . .
agreed to make the loyalty files available for review
by our subcommittee with respect to such individuals,
on the theory that to do so would not establish a
precedent for subsequent exceptions in violation of
his March 13, 1948, directive" (Senate Report 2108,
State Department Employee Loyalty Investigation,
p. 9). The President's directive of March 13, 1948,
is Item 50, 1948 volume, this series.

On April 5, 1950, Seth Richardson, Chairman of
the Loyalty Review Board, stated before the Tydings*
subcommittee that "not one single case or evidence
directing towards a case of espionage has been dis-
closed in the record. ... I say it is an extraordinary
thing that not one single syllable of evidence has been
found by the FBI, efficient as they are, indicating
that a particular case involves a question of es-
pionage" (State Department Employee Loyalty In-
vestigation, Hearings, subcommittee of the Com-
mittee on Foreign Relations, Senate, 8ist Cong., 2d
sess., pt. I, p. 409).

The President's letters to Senator Tydings and
Mr. Richardson were released at Key West, Fla.

80 The President's News Conference at Key West.
March 30, 1950

THE PRESIDENT. I wiU answcf any questions
I can, if you want to start in.

[i.] Q. Mr. President, the New York
Times this morning carried a story saying
that you had suggested Secretary Acheson
explore with Senator Vandenberg and other
Republicans the possibility of appointing a
Republican as Ambassador at Large to help
out on bipartisan Asiatic policy.

THE PRESIDENT. The matter has been
discussed.

Q. Are you nearing a decision on that, sir?

THE PRESIDENT. Working on it. No de-
cision as yet.

Q. Have you got a nominee in mind, Mr.
President.?

THE PRESIDENT. No. No, I havcn't. Sev-

eral under consideration. It is nothing
unusual or new at all. The Republican
members of the United Nations delegation
and the same people who have been in on
the foreign policy have always been con-
sulted about the world policy. It is not an
Asiatic policy or a European policy; it is a
world policy. The foreign policy of the
United States covers the whole globe, and
always has ever since I have been President.

Q. Well, Mr. President, is it an Ambassa-
dor at Large on Asiatic policy or world
policy.?

THE PRESIDENT. World policy. The whole
thing will be a world policy program. Am-
bassador Jessup has been making a prelimi-
nary survey in the Eastern Hemisphere on

232

Harry S. Truman, ig^o

Mar. 30 [80]

the subject. It is not confined to any one
place.

We are trying to implement the United
Nations on the basis where it will work
under the charter for the purpose for which
it was intended, where all countries can meet
and discuss their problems and come to
agreement without having to feud each other
over it. That is the object of the whole
thing. World peace is what we are working
for, and our policy hasn't changed, and our
approach to it has never changed since I
have been President.

Q. Mr. President, would this particular
position be similar to the one held by Mr.
Jessup? He is an Ambassador at Large.

THE PRESIDENT. That's right. It's just a
part of the foreign policy team of the United
States. And it's a bipartisan policy. That
is what we have always endeavored to main-
tain. It has been the same under every
Secretary of State since Cordell Hull, who
instituted it.

[2.] Q. Mr. President, are you ready as
yet to make any announcements regarding
some of the reported appointments that are
impending?

THE PRESIDENT. When you get through
asking questions on other subjects, I will
talk to you about it. I don't want that
fence broken down. [Laughter]

[3.] Q. Could you comment, sir, on
General Eisenhower's statement before the
congressional committee? ^

THE PRESIDENT. The Statements of General
Eisenhower before the congressional com-
mittee were fundamentally in complete
agreement with the policies which we have

^Gen. Dwight D. Eisenhower appeared before
the Senate Appropriations Subcommittee on March
29, 1950. He testified that "several hundred mil-
lions" of dollars probably should be added to Presi-
dent Truman's military budget to strike a proper
balance between the requirements of economy and
security.

pursued right along. No fundamental dif-
ference between us.

Q. What you have laid down in your con-
ferences with the General?

THE PRESIDENT. Yes — Well, in the Budget
Message. And Eisenhower was in on the
conferences that were held. General Ei-
senhower, and General Marshall, and all
those able and distinguished gentlemen —
Admiral Nimitz — ^were consulted with re-
gard to the budget and its program. And
the General's testimony was in almost com-
plete agreement with that arrangement.

Q. Mr. President, do you agree with Gen-
eral Eisenhower that our defenses are pos-
sibly below the point of safety?

THE PRESIDENT. No, I do UOt. I dou't

think General Eisenhower intended to imply
that. I have read his testimony.

Q. I was thinking in terms of his speech
Saturday night.^

THE PRESIDENT. Oh, Well, you kuow in
making speeches you must remember that
everybody has his ideas on public speaking,
but the record before the Senate committee
is what you have to go on.

Q. Mr. President, yesterday the stories
from Washington said that General Eisen-
hower said he thought this country was
taking chances in the cold war by not spend-
ing more on air force, antisubmarine work,
and Alaskan bases?

THE PRESIDENT. That is a natural feeling
for any military man. If I didn't have in
view the overall budget of the United States,
the military people would have more than
half of it. They asked for $22 billion. You
know they can't have that, and they know it,
too.

^ General Eisenhower, president of Columbia Uni-
versity, speaking at the University on March 23,
stated that disarmament in some of its phases had
gone beyond the degree that he could "possibly
advise, until we have certain knowledge that all
nations, in concerted action, are doing likewise."

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Q. That was the figure which, as I recall
about a year ago, you said — coming back
from West Virginia — you said that was be-
tween $22 and $23 billion, didn't you?

THE PRESIDENT. Yes, that is correct. I
don't blame them for that, because they nat-
urally want a perfected machine. But we
have to furnish the best defense machine
we possibly can with the funds that we have
available.

Q. That is what you said then, sir.

[At this point the President was given his coat,
which he put on.]

THE PRESIDENT. Do you think I'm getting
cold? [Laughter]

Q. In other words, you don't think this
13 billion endangers the country?

THE PRESIDENT. Not the slightest. If I
thought so, I would ask for more money.
[Laughter] The budget — I think the
budget speaks for itself.

[4.] Q. Mr. President, do you think
Senator McCarthy is getting anywhere in
his attempt to win the case against the State
Department? ^

THE PRESIDENT. What's that?

Q. Do you think that Senator McCarthy
can show any disloyalty exists in the State
Department?

THE PRESIDENT. I think the greatest asset
that the Kremlin has is Senator McCarthy.

Q. Would you care to elaborate on that?

THE PRESIDENT. I dou't think it needs any
elaboration — I don't think it needs any elab-
oration.

Q. Brother, will that hit page one to-
morrow!

Q. If you think we are going to bust down
the fence on what you have got later, that's
a pretty good starter. [Laughter]

Q. Mr. President, could we quote that one
phrase, "I think the greatest asset the Krem-
lin has is Senator McCarthy"?

' See Item 79 and note.

THE PRESIDENT. Now let me give you a
litde preliminary, and then I will tell you
what I think you ought to do. Let me tell
you what the situation is.

We started out in 1945, when I became
President, and the two wars were still going
on, and the Russians were our allies, just
the same as the British and the French and
Brazil and the South American countries.
And we won the war together.

We organized the United Nations in April
1945, and one of the first questions that was
asked me, after I was sworn in at 7:09
o'clock on the 12th of April, was whether
or not the San Francisco conference on the
United Nations should go ahead. And I
said it certainly will. It went ahead and we
finally succeeded in getting a charter and
getting it agreed to by I think 51 nations, if
I remember correctly.

Then our objective was to — as quickly as
possible — get peace in the world. We made
certain agreements with the Russians and
the British and the French and the Chinese.
We kept those agreements to the letter.
They have nearly all been — those agreements
where the Russians were involved — been
broken by the Russians. And it became
perfectly evident that they had no intention
of carrying out the fundamental principles
of the United Nations Charter and the agree-
ments which had been made at Teheran,
Yalta, and Potsdam. And it became evident
that there was an endeavor on the part of
the Kremlin to control the world.

A procedure was instituted which came to
be known as the cold war. The airlift to
Berlin was only one phase of it. People be-
came alarmed here in the United States then,
that there might be people whose sympathies
were with the Communist ideal of govern-
ment — which is not communism under any
circumstances, it is totalitarianism of the
worst brand. There isn't any difference be-
tween the totalitarian Russian Government

234

Harry S. Truman, igp

Mar. 30 [80]

and the Hitler government and the Franco
government in Spain. They are all alike.
They are police state governments.

In 1947 I instituted a loyalty program for
Government employees, and that loyalty
procedure program was set up in such a way
that the rights of individuals were respected.

In a survey of the 2,200,000 employees at
that time, I think there were some 205 —
something like that — ^who left the service.
I don't know — a great many of them left of
their own accord.

Q. How many, Mr. President?

THE PRESIDENT. Somewhere in the neigh-
borhood of 205. Does anybody remember
those figures exactly? It's a very small
figure.

Q. Very small.

THE PRESIDENT. An infinitesimal part of
I percent. We will get the figures for you.

And then, for political background, the
Republicans have been trying vainly to find
an issue on which to make a bid for the
control of the Congress for next year. They
tried "statism." They tried "welfare state."
They tried "socialism." And there are a
certain number of members of the Republi-
can Party who are trying to dig up that old
malodorous dead horse called "isolationism."
And in order to do that, they are perfectly
willing to sabotage the bipartisan foreign
policy of the United States. And this fiasco
which has been going on in the Senate is the
very best asset that the Kremlin could have
in the operation of the cold war. And that
is what I mean when I say that McCarthy's
antics are the best asset that the Kremlin can
have.

Now, if anybody really felt that there
were disloyal people in the employ of the
Government, the proper and the honorable
way to handle the situation would be to
come to the President of the United States
and say, "This man is a disloyal person. He
is in such and such a department." We will

investigate him immediately, and if he were
a disloyal person he would be immediately
fired.

That is not what they want. They are
trying to create an issue, and it is going to
be just as big a fiasco as the campaign in
New York and other places on these other
false and fatuous issues.

With a little bit of intelligence they could
find an issue at home without a bit of
trouble!

Q. What would it be, Mr. President?

THE PRESIDENT. Anything in the domestic
line. I will meet them on any subject they
want, but to try to sabotage the foreign policy
of the United States, in the face of the situa-
tion with which we are faced, is just as bad
as trying to cut the Army in time of war.

Q. On that question we were just kidding.

THE PRESIDENT. And that gave me a chance
to give you an answer. To try to sabotage
the foreign policy of the United States is just
as bad in this cold war as it would be to
shoot our soldiers in the back in a hot war.

I am fed up with what is going on, and I
am giving you the facts as I see them.

[5.] Q. Mr. President, do you consider
the Republican Party as a party?

THE PRESIDENT. The policy of the Republi-
can Party has endorsed the antics of Mr.
McCarthy.

Q. That affects the bipartisan

THE PRESIDENT. That's what it is for —
that's what it is for. They are anxious for
the return of isolationism.

Q. Do you think that this has torpedoed,
then, the bipartisan

THE PRESIDENT. It is an endeavor to tor-
pedo the bipartisan foreign policy. They
are not going to succeed, because the level-
headed Republicans do not believe that at all,
as note Mr. Stimson, Senator Vandenberg,
Senator Saltonstall, and a dozen others I
could name, who know exactly what is going
on and are trying their best to cooperate.

235

[8o] Mar. 30

Public Papers of the Presidents

And I am going to try to help them prevent
it going under.

Q. Well, Mr. President, to carry that out
to its logical conclusion, when these people
come up for reelection, with the grace of God
and so on, there is nothing that the Demo-
cratic Party can do except simply to sit on
the sidelines and say, "Well?"

THE PRESIDENT. Well, it's too bad. It's a
dangerous situation, and it has got to be
stopped. And every citizen in the United
States is going to find out just exactly what
the facts are when I get through with this
thing.

Q. You will stand up on one side, and
they will stand up on the other?

THE PRESIDENT. There's only one side that
the people will stay on, and that is the side
that will lead to peace. That is all we are
after. This is just another fiasco to find an
issue. This is not it,

Q. Mr. President, would you like to name
any others besides Senator McCarthy who
have participated in this attempt to sabotage
our foreign policy?
THE PRESIDENT. Senator Wherry.
Q. Yes, sir?

THE PRESIDENT. Senator Bridges.
Q. Yes, sir?

THE PRESIDENT. That's about as far as I
care to go.
Q. Okay, sir.

[6.] Q. Now, what I forgot to say was
would you like to say anything about Mr.
Acheson and Mr. Lattimore,^ and — what's
his name — ^the Ambassador at Large?

THE PRESIDENT. Jcssup. I think I made
myself perfectly clear that I think Dean
Acheson will go down in history as one of
the great Secretaries of State. You know
very well that Mr. Jessup is as able and dis-
tinguished a citizen as this country has ever

* Owen Lattimore, former official of the Office of
War Information.

produced. Lattimore is a member of the
faculty of Johns Hopkins University and is a
very well informed person on foreign affairs.

Q. You don't believe he is a spy?

THE PRESIDENT. Why of coursc not. It's
silly on the face of it.

Q. Mr. President, don't you think the
American people recognize this for what
it is?

THE PRESIDENT. There is no doubt about
it. I am just emphatically bringing it to
their attention.

[7.] Q. For direct quotes, could we have
that, **I think the greatest asset

THE PRESIDENT. I would rather you would
say that the greatest asset the Kremlin has
is the present approach of those in the Sen-
ate who are trying to sabotage the bipartisan
foreign policy.

Q. Could we have that read back to us?

THE PRESIDENT. Sure. Jack?

Mr. Romagna. I'm all balled up.

THE PRESIDENT. Take your time — take
your time.

[As the White House Official Reporter pondered, the
President rephrased the statement.^

The greatest asset that the Kremlin has is
the partisan attempt in the Senate to sabotage
the bipartisan foreign policy of the United
States.

Q. This may seem redundant, but this is
just for the record. The partisan effort, of
course, is the efEort by the Republicans in
the Senate

THE PRESIDENT. Well uow, I didn't say
that, "partisan effort." Leave it at that.
Draw your own conclusions.

[8.] I am going to make some changes
on the appointment front. I have drafted
Stuart Symington to be Chairman of the
National Security Resources Board, and as
soon as I have named his successor, which
will be in a week or 10 days, he will take

236

Harry S. Truman, ig^o

Mar. 30 [80]

over. He will stay as Secretary for Air
until his successor is appointed and con-
firmed.

I am going to make Gordon Gray, for the
time that he has left — ^you see he is going
down as president of the University of North
Carolina — ^between now and the time that
he goes I am going to make him a Special
Assistant to the President, to mobilize and
coordinate the work in the various agencies
of the Government, for an analysis of the
factors bearing on the "dollar gap" disparity
between exports and imports in the United
States. I hope that out of these studies and
a full public discussion of the issues will be
developed, along bipartisan principles, pol-
icies and programs which seem most likely
to offer a solution to that urgent problem.
That is the greatest problem with which
we are faced now. Charlie^ will furnish
you with a statement on it regarding Gordon
Gray.

I am going to make Frank Pace Secretary
for the Army. I am going to appoint him —
he has to be confirmed, you understand —
and Fred Lawton, who is now Assistant Di-
rector of the Budget, will be Director of the
Budget.

And Elmer Staats

Q. How is that name spelled?

THE PRESIDENT. S-t-a-a-t-s — Elmer B, Staats
will step up from the Executive Assistant
to the Director of the Budget Bureau to the
Assistant to the Budget Director. He will
take Fred Lawton's place.

Q. Mr. President, this raises the question
about Lawton. He has been in and out of
that job, Vd say two — three times. There
has always been a question as to his status.

THE PRESIDENT. He has always been "act-
ing" before, and he is going to be the Budget
Director now. That is what we are trying
to get at. He will be the Budget Director.

* Charles G. Ross, Secretary to the President.

Q. Mr. President, are there any more?

THE PRESIDENT. I have got oue more — no
more appointments, no.

Q. Will Frank Pace become Secretary of
the Army right away then, or very soon?

THE PRESIDENT. Yes — ^immediately. All
these appointments will be set up, and just
as soon as they are confirmed, he will take
over.

Q. May I ask on one point, whether
Thomas K. Finletter will succeed Syming-
ton?

THE PRESIDENT. I am uot ready to answer
any questions on that. When the time
comes, I will announce his successor.^

Q. Will Gray leave now to take on his new
appointment?

THE PRESIDENT. Now, yes. As soou as
Pace is confirmed.

[9.] Q. Mr. President, that dollar gap
you spoke of, that would make it possible
only by stimulating imports to the United
States?

THE PRESIDENT. That is what I am appoint-
ing this Director for, to find out just exacdy
what the remedy is. Last year we exported
$16 billion worth of goods and services and
received in return $10 billion worth. You
can*t keep on doing business on that basis.
That's what this is for, to find out what the
answer is, and I can't give you the answer
now. If I could, I wouldn't have to appoint
the fellow.

[10.] I had a telegram from the Gov-
ernor of Montana, informing me that there
had been an extreme emergency caused by
late snow up there, and I have asked the
General Services Administration to make an
investigation and if it develops, why we will
follow the same procedure we did before
in the same circumstances.

® The Senate confirmed the nomination of Thomas
K. Finletter as Secretary of the Air Force on April 13,
1950.

237

[8o] Mar. 30

Public Papers of the Presidents

Q. Give them money ?

THE PRESIDENT. How's that? Fumish
them with the machinery.

[11.] Q. How long will Mr. Gray stay
in this new job?

THE PRESIDENT. Takes about 3 or 4
months. He will probably want to leave
before school starts in North Carolina.

Q. That will mean, say, in August?

THE PRESIDENT. Well, I am willing for him
to stay as long as he can under the circum-
stances. He will probably stay at least until
the first of August. It won't take long
to get the facts and things, and then we will
go on from there.

Q. In other words, this is a specific job?

THE PRESIDENT. That's right. This will
be the beginning of it. What he is doing
will be to coordinate it, and we go on from
there. When he has to go to North Caro-
lina, we will appoint another Director.

[12.] Q. Mr. President, I don't like to
go back, but

THE PRESIDENT. Go right ahead.

Q. 1 just wondered whether the ques-
tion of a world policy program, which you
mentioned previously in connection with
the appointment of a new Ambassador at
Large, is that something entirely new that
you are now planning?

THE PRESIDENT. No, no, uo. You sce,
John Foster Dulles was in that capacity
before. We have got Mr. Cooper '^ in the
Dulles place, when Mr. Dulles went into
politics, and we are now enlarging the thing

'^ John Sherman Cooper.

to some extent. Along with Cooper, we are
going to appoint another outstanding Re-
publican, who believes in the United Nations,
to go along with us and help us continue to
coordinate the foreign policy of the United
States.

Q. Would it be United Nations?

THE PRESIDENT. No, this is a United States
program.

Q. In effect he will succeed Jessup?

THE PRESIDENT. That is correct — that's
right.

Q. Jessup, then, will no longer have the
title of Ambassador at Large in his new
position?

THE PRESIDENT. No.

Q. What is his new title?

THE PRESIDENT. Assistant to the Secretary
of State.

Q. Mr. President, have you asked Mr.
Vandenberg and other Republicans to sug-
gest a candidate for the job?

THE PRESIDENT. Yes, I have.

Q. You have?

THE PRESIDENT. I have. I havc, through
the Secretary of State. I authorized the
Secretary of State to make such a request.

Reporter: Mr. President, we have had a
wonderful time at your lawn party, and
thank you very much.

note: President Truman's two hundred and twenty-
first news conference was held on the lawn of the
Little White House, Key West, Fla., at 4:15 p.m.
on Thursday, March 30, 1950. The White House
Official Reporter noted that preceding the conference
the President had entertained the newsmen at a
picnic on the lawn.

81 Letter to Gordon Gray Regarding His Appointment as
Special Assistant to the President. April 3, 1950

[ Released April 3, 1950. Dated March 31, 1950 ]

My dear Mr, Gray:

I am highly pleased that you find it pos-
sible to undertake an assignment as Special

Assistant to the President prior to assuming
your duties later this year as President of the
University of North Carolina. The task

238

Harry S. Truman, ig^o

Apr. 3 [8i]

which you are undertaking is of major im-
portance to this country.

Today the American people can look back
with pride over our record in the field of
foreign policy during the past five years. It
is a record of achievement in creating a
strong base for military defenses against the
forces of aggression; in the development of
international political institutions; and in
creating economic programs designed to re-
inforce and expand the economic base for
world peace.

It is hardly necessary to emphasize again
that economic security is an essential ele-
ment of political security. Our people
adopted such programs as the European Re-
covery Program and aid to Greece, Turkey
and Korea, in the belief that, as the free
nations felt the surge of economic strength
and the reassurance of normal economic re-
lationships, hope and freedom would be re-
vived, sustained, and strengthened. This
assistance is essential to help not only Europe
but other areas of the world to recover from
the war and to strengthen their economies
against communist subversion or aggression.

As the result of foreign efforts and Ameri-
can assistance, in many areas production has
increased to the point where shortages have
diminished and the central international
economic problem has shifted to the field of
trade. Most countries of the world are de-
pendent upon foreign trade for their eco-
nomic survival. Their problem is especially
difficult because prewar trade patterns have
been destroyed, sources of supply have
shifted, and sources of foreign exchange in-
come have changed.

The United States is at present helping to
meet these difficulties by sending abroad
much more of the product of American
farms and factories than other nations are
able to pay for from the sale of their own
goods and services.

This extraordinary assistance is of course

a temporary measure. Our basic purpose
has been, and must continue to be, to help
build a structure of international economic
relationships which will permit each country,
through the free flow of goods and capital,
to achieve sound economic growth without
the necessity for special financial aid.

We must be certain that we are taking
every possible step to attain this objective.
We have a vital economic interest in its
achievement. The present unbalanced situa-
tion places a heavy burden upon our national
Budget. We are now a creditor nation, and
this fact has an important bearing on both
our domestic and foreign policies. We can-
not continue to sell our goods abroad, or re-
ceive a return on our public and private in-
vestments abroad, unless foreign countries
can obtain the necessary dollars to make their
payments.

This is of course not solely a United States
problem. I am gratified that so many other
countries are looking ahead and taking
vigorous steps directed toward achieving
their self-support. It is now time for us also
to look ahead and assure ourselves that our
own policies are those which will serve best
to reinforce our economic strength and that
of the other free nations of the world.

This complex problem, affecting as it does
the interests of all segments of the American
people, also involves many agencies of this
Government. For some time I have been
considering how best to mobilize the re-
sources of the Government and the experi-
ence and thinking of our people in charting
our course. To this end, I have decided to
appoint you as Special Assistant to the Presi-
dent to assist in this task. Your principal
role in this position will be to advise and as-
sist in coordinating and stimulating the ac-
tivities of the various Governmental agencies
which can contribute to the solution of the
problem. I shall also look to you to obtain
the views of experts and interested groups

239

[8i] Apr. 3

Public Papers of the Presidents

outside the Government on particular aspects
of the problem.

I feel that this task is above partisanship,
and I am sure that your approach to it v^ill
make this abundandy clear. The first phase
of our w^ork is to determine the nature,
dimensions, and significance of this problem.
In the light of this understanding, we must
develop the broad lines of policy v^hich in
turn must be laid before the people and the
Congress. This approach must have as its
final goal a practical and forward-looking
course of action.

Sincerely yours,

Harry S. Truman

[Honorable Gordon Gray, Secretary of the Army,
Washington, D.C.]

note: The text of Mr. Gray's letter, dated April i,
was released with the President's reply.

On April 3 the White House released a back-
ground paper on the balance of payments problem.

Noting that the United States exported $16 billion
worth of goods and services per year while im-
porting only about $10 billion worth, the release
stated that "the reduction and eventual termination
of foreign assistance will create tremendous eco-
nomic problems at home and abroad unless vigorous
steps are taken both by the United States and for-
eign countries. If no offsetting measures arc worked
out, it may well be that United States exports will
be sharply reduced, with serious repercussions on
our domestic economy, and with equally serious
effects on friendly areas of the world which are
dependent on our goods."

In conclusion the release stated, "There is inr
creasing recognition in the United States that we
are a great creditor nation and that we cannot con-
tinue to sell our goods abroad, or receive a return
on our investments and the credit obligations due
us, unless foreign countries in some way or other
can obtain the necessary hard currency to make
these payments. . . . The goal toward which all
nations must work is clear — one where interna-
tional trade flows freely with as little arbitrary in-
terference as possible."

The President's letter was released at Key West,
Fla.

82 Letter to Senator Tydings Again Refusing To Disclose

Confidential Information on Employee Loyalty. April 3, 1950

Dear Senator Tydings:

The Secretary of State, the Attorney Gen-
eral, and the Chairman of the Civil Service
Commission have referred to me the matter
of the subpoenas w^hich have been served on
them, directing them to appear on April 4,
1950, before the Subcommittee established
by the Committee on Foreign Relations of
the Senate, pursuant to S. Res. 231, 8ist
Congress, and to produce various documents
and papers relating to a number of persons
whose names appear on a confidential list
attached to each subpoena.

In my letter to you of March 28, 1950,
I stated the reasons v^hy the confidential
loyalty files of Government employees should
not be produced. I should like at this time
to re-state those reasons briefly.

The disclosure of these files would
seriously prejudice the future effectiveness
and usefulness of the Federal Bureau of In-
vestigation as an investigative agency; the
embarrassment, and even danger, to those
who have given confidential information can-
not be overemphasized. Disclosure would
not only deprive the Federal Bureau of In-
vestigation and other investigative agencies
of the Government of the availability of those
confidential informants in the future, but
would also gravely impair their ability to
gather confidential information from other
sources as well.

The employee loyalty program depends
upon the investigative services of the Fed-
eral Bureau of Investigation. The disclosure
of the files would, therefore, result in serious

240

Harry S. Truman, ig^o

Apr. 3 [82]

harm to that program. Such disclosure, in-
stead of helping to keep disloyal people out
of the Government service, would impair the
very effective means we now have for accom-
plishing that purpose.

The investigative files of the Federal Bu-
reau of Investigation do not contain proven
information alone. They include any un-
verified charges and allegations, leads and
suspicions. Disclosure of the files would,
therefore, result in serious injustice to, and
damage to the reputations of, many innocent
persons.

The reasons why disclosure of the files
would be contrary to the public interest were
more fully stated by the Director of the Fed-
eral Bureau of Investigation when he testi-
fied before your Subcommittee on March 27,
1950. The Attorney General at the same
time not only fully stated the reasons of pub-
lic policy which compel the maintenance of
the confidential nature of the files, but also
discussed the Constitutional precedents
which support without any question my
authority to take the position I have in this
matter.

The authority of the President in this re-
gard has been recognized since the begin-
nings of our Government. Our first Presi-
dent and his Cabinet, in considering the first
request made by a House of Congress for
executive papers, concluded that while the
Congress might call for papers generally,
the Executive ought to communicate only
such papers as the public good would permit,
and ought to refuse those the disclosure of
which would be contrary to the public
interest.

No President has ever complied with an
order of the Legislative Branch directing
the Executive Branch to produce confidential

documents, the disclosure of which was con-
sidered by the President to be contrary to
the public interest. The Presidents who have
had to meet that issue are numerous, and
they have uniformly rejected such encroach-
ments on the Constitutional power of the
President. George Washington, James Mon-
roe, Andrew Jackson and Grover Cleveland
are only a few of the Presidents who have
followed this course. In our own lifetime,
William Howard Taft, in his book "The
Chief Magistrate," affirmed his faith in the
Constitutional power of the President on this
issue. And also within this century, Attor-
neys General serving in the Cabinets of Pres-
idents Theodore Roosevelt, Taft, Wilson,
Coolidge and Franklin D. Roosevelt, have
re-stated the responsibility of the Executive
Branch to maintain the integrity of confiden-
tial information when its disclosure would be
contrary to the public interest. I would be
derelict in my duty if I failed to do so.

I have felt obliged, therefore, to direct the
Secretary of State, the Attorney General and
the Chairman of the Civil Service Commis-
sion not to comply with your subpoenas.

As I have already informed you, I wish to
cooperate with your Subcommittee in every
reasonable way, and for that reason I have
asked the bipartisan Loyalty Review Board
to make an independent review of the loyalty
cases before your Subcommittee.
Sincerely yours,

Harry S. Truman

[Honorable Millard E. Tydings, Chairman, Subcom-
mittee on Loyalty of State Department Employees,
Committee on Foreign Relations, United States
Senate, Washington, D.C.]

note: See Item 79 and note.

The President's letter was released at Key West,
Fla.

241

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83 Special Message to the Congress Upon Approving Bill
Relating to Cotton and Peanut Acreage Allotments
and Marketing Quotas. April 3, 1950

To the Congress of the United States:

On March 31, 1950, 1 approved H.J. Res.
3985 "Relating to cotton and peanut acre-
age allotments and marketing quotas under
the Agricultural Adjustment Act of 1938,
as amended, and to price supports for
potatoes."

I approved this measure v^ith reluctance,
because it contains some provisions which
seem to me to be definitely undesirable, and
its other provisions merely undertake to alle-
viate defects in the existing farm program
temporarily, vv^ithout correcting those defects.
Moreover, even this temporary relief, v^hich
is urgently needed, v^ill require additional
expenditures of public funds and increase
the likelihood of future difficulties for the
farm program.

One part of the bill, that relating to pota-
toes, is a step in the right direction for the
long run. While it would do litde or noth-
ing to remedy for this year's crop the de-
fects in the potato price support program, it
does hold out hope of improving this pro-
gram for subsequent years. However, if
each step made in improving the farm pro-
gram in one place is to be accompanied by
a step backward in another place, we will
fail to make the advances in that program
which are necessary if it is to retain the ap-
proval of the American people.

This Joint Resolution furnishes additional
grounds for the charges that the present farm
program is costly and piles up unmanage-
able surpluses at the same time that it main-
tains artificially high prices for agricultural
commodities. What is needed is for the Con-
gress to approach this problem with a view
to correcting the fundamental shortcomings
in the present farm program rather than

patching it up with makeshift legislation.

In spite of the shortcomings of the pres-
ent Joint Resolution, I have decided that the
urgent need for the relief which it will give
to cotton producers, and the promise which
it holds out for making some improvement
in the potato program, outweigh the defects
of the measure.

The principal relief provided is in the
form of additional cotton acreage allotments.
The cotton acreage allotment system was re-
vised by the Congress last year. In that legis-
lation, against the advice of the Secretary of
Agriculture, the Congress adopted an allot-
ment system based primarily upon the farm-
er's acreage of crop land. The legislation
provided in detail the method by which
allotments were to be made. Just as the
Secretary of Agriculture had warned, this
legislation has had grossly inequitable re-
sults. Some cotton farmers were required
to make little or no reduction in cotton acre-
age to comply with their allotments, other
cotton farmers were required to reduce their
acreage by as much as eighty percent. The
present Joint Resolution merely provides
additional cotton acreage allotments for this
year to alleviate the hardship in those cases
where the reductions have been inequitably
severe. It does not remedy the basic defect
in the present system of determining cotton
acreage allotments. Indeed, in one respect
it makes it even worse. It provides, in ef-
fect, that cotton acreage which is surrendered
by one farmer and re-allotted, even though it
is not planted by any farmer, must continue
in future years to be allotted to that same
county and State. This provision is ob-
viously not necessary to relieve present in-
equities and it is clearly unfair to areas

242

Harry S. Truman, ig^o

Apr. 3 [83]

where cotton farmers are being severely re-
stricted in their plantings, and favors areas
making little or no contribution to the re-
duction of cotton production.

I urge the Congress to revise the perma-
nent laws regarding the cotton acreage allot-
ments and marketing quotas. Such legisla-
tion should provide for allotments to be based
primarily upon each farmer's past planting
history. Furthermore, it should give ample
latitude to farmer-elected local committee-
men, so that they may alleviate inequities
among their neighbors and make adjust-
ments for local conditions. These principles
are generally in effect for all major crops
but cotton, and experience has demonstrated
their superiority to those embodied in the
cotton legislation enacted last year, from
which farmers are now seeking relief.

Sections 3, 4, and 5 of H.J. Res. 398 deal
with Irish potatoes. The most important of
these is Section 5, which provides that no
price support shall be granted to potatoes
for the crop year 1951 and later years unless
marketing quotas are in effect. Since no
marketing quotas for potatoes are permitted
by present law, this Section amounts to a
policy declaration by the Congress that it
intends to enact better price support legisla-
tion for potatoes than we now have. With
this purpose I am in hearty accord.

Successive Secretaries of Agriculture have
been urging the Congress for several years
to enact better legislation regarding potatoes,
in order to bring supplies into line with
demand, to provide better distribution of
surplus potatoes, and to reduce the cost of
the program to the Government. To amend
present law to provide for effective market-
ing quotas would be a substantial improve-
ment over the present situation. It would
not, however, in my judgment, be all that
is necessary. I again urge the Congress to
authorize a system of production payments

for potatoes (and other perishable commodi-
ties) so that unavoidable surpluses can be
sold to consumers and used, instead of taken
off the market and largely wasted.

Sections 6 and 7 of the Joint Resolution
deal with peanuts. Section 7 is designed to
provide some relief for the peanut farmers
in several States (particularly Alabama and
Texas) whose acreage was cut especially
severely under present law. I believe that
the peanut farmers of the States affected
should have such relief, and that is one of
the reasons which led me to approve the
Joint Resolution.

Section 6, however, is another matter.
This Section would permit the planting of
peanuts to be increased substantially above
the acreage allotments now established.
The peanuts produced on these extra acres
would not be eligible for price support, but
would, instead, be sold for crushing, and the
farmer would receive only what the result-
ing peanut oil would bring on the market.
The domestic "two-price" system for pea-
nuts thus established is subject to serious
objections.

First, under present conditions, the pro-
duction of peanuts for oil is unprofitable for
the growers and is an uneconomic and waste-
ful use of agricultural resources. During
the war and right afterwards, when fats and
oils were in seriously short supply, we needed
peanut oil badly. Now that supplies of soy-
beans and other more economical sources of
edible fats and oils are again sufficient, it
would be foolish to go on using good land
to produce peanuts for oil which would not
yield a profit to the growers. I believe that
peanut farmers will realize that it would
not be to their own best interest to expand
their plantings of peanuts greatly. Conse-
quently, I do not expect large additional
amounts of peanuts to be produced for oil
as a result of this Section. Nevertheless,

243

[83] Apr. 3

Public Papers of the Presidents

this provision represents a breach in the
integrity of the quota system upon which the
support price program depends. If it should
be taken as a precedent for other crops, the
whole support price program might be
endangered.

Second, the administrative diflSculties of
operating this "two-price" system for pea-
nuts will be very great. In order to prevent
the diversion of peanuts produced on the
excess acres to the higher of the two price
outlets, an extensive system of inspection,
identification, and supervision will have to
be developed. Administrative difficulties
should not stand in the way of desirable
programs, but in this case a complicated,
costly, and annoying administrative network
will be required for a very dubious purpose.

Above and beyond these specific objec-
tions to Section 6, it may have very unfor-
tunate implications for future years and other
crops. If farmers do produce large quanti-
ties of peanuts for oil at no profit, there will
inevitably be pressures for supporting the
price of peanut oil in the future, which
would only complicate matters further.
Even more serious, if these special provisions
for peanuts were to be regarded as a prece-
dent, it may be urged that similar provisions
should be enacted for other crops, regardless
of the disruption that could result to domes-

tic and world markets. I believe it would
be a very serious mistake for us to embark
on such a course, and I do not regard this
peanut provision as anything but a tempo-
rary aberration from proper legislation.

We face no small task in providing a sys-
tem of agricultural legislation which will
serve the needs of farmers for a fair income
and will, at the same time, serve the needs
of consumers for ample supplies of foods^
fibers, and other crops at reasonable prices^
and the needs of the whole Nation for a
growing, expanding economy and a healthy
world trade. During the present postwar
transition period, our agricultural legisla-
tion is necessarily cosdy, but we obviously
cannot afford to add to those costs for pur-
poses which will not contribute to the real
long-run interests of farmers or the Nation.

I urge the Congress to proceed to consider
fundamental improvements in our agricul-
tural legislation to make it more eflficient,
less costly, and more conducive to abundant
production of farm crops, yielding a fair
return to farmers, and selling at prices con-
sumers can afford.

Harry S. Truman

note: As enacted, H.J. Res. 398 is Public Law 471,
8 1 St Congress (64 Stat. 40).

The President's message was released at Key West,
Fla.

84 Special Message to the Congress on the Unemployment
Insurance System. April 6, 1950

To the ^Congress of the United States:

One of the great advances in economic
legislation made during the 1930's was to
establish the Federal-State system of employ-
ment security. This system has two parts —
first, a nation-wide employment service to
help workers find jobs and employers find
job-seekers, and, second, a nation-wide sys-
tem of unemployment insurance to help tide

workers over periods of unemployment.

Finding a job is of more importance to an
unemployed worker, of course, than receiv-
ing unemployment insurance benefits. Con-
sequently, great emphasis has always been
placed on strengthening and improving the
employment service.

We cannot, however, completely eliminate
unemployment; even in times of high em-

244

Harry S. Truman, ig^o

Apr. 6 [84]

ployment, there will be turnover of jobs and
numerous shifts and changes in job oppor-
tunities. Consequently, we must have a
strong and steadily improving system of
unemployment insurance.

Under our Federal-State unemployment
insurance system, benefits are paid, in ac-
cordance with State laws, to workers who,
while able and seeking to work, are unem-
ployed through no fault of their own. These
benefits are paid from the proceeds of State
payroll taxes, which are deposited in reserve
accounts — one for each State — ^in the Unem-
ployment Trust Fund in the United States
Treasury.

In the past twelve years, unemployment in-
surance has proved its worth not only as an
invaluable source of support to unemployed
workers and their families, but also as a
means of maintaining purchasing power of
great value to the entire economy. In 1949,
for example, 1.7 billion dollars in bene-
fits were paid to more than seven million
individuals, the largest amount for any year
in the history of the system. This was a
significant factor in preventing serious dis-
locations during last year's period of eco-
nomic readjustment.

Our experience with unemployment in-
surance has revealed weaknesses as well as
strengths in the existing system. While
many improvements have been made in the
State laws since the program began, the sys-
tem is far from adequate today.

Over 15 million workers — about one-third
of all employees — are not protected by unem-
ployment insurance. In 1949, only about
one-fifth of the purchasing power lost
through unemployment was replaced by un-
employment insurance benefits. In 1949,
weekly benefits averaged only about $20 —
not enough to preserve a minimum standard
of living. Nearly 2 million workers used up
their benefits entirely — showing that benefits
were not available for a long enough period.

While the unemployment reserve funds of
the States have so far proved to be adequate,
a few States may soon face financial difficul-
ties because of local concentration of un-
employment.

On several occasions in recent years, I have
recommended that the system be improved,
to extend protection to many workers not
now covered; to provide, in every State, bene-
fits for 26 weeks ranging up to $30 a week
for single persons, with additional bene-
fits for dependents; and to increase the fi-
nancial stability of the system.

Action on these proposals has become
more urgent as unemployment has increased
somewhat in spite of the continuing high
levels of business activity. While unemploy-
ment dropped over half a million between
February and March, on the average nearly
4^ million persons were looking for work
during the first three months of this year,
as compared to 3 million in the same months
of 1949, and nearly 254 million in 1948.
Furthermore, the length of time it takes peo-
ple to find jobs is becoming longer. One
million people — about one out of every four
unemployed — have been out of work for 15
weeks or more. A year ago, only 420,000
were without jobs that long, and in 1948,
only 330,000.

This gradual growth in unemployment
over the last two years is not because there
are fewer jobs. Employment has remained
at high levels, along with industrial produc-
tion, consumer incomes, and other indica-
tors of the health of our economy.

But there are more people looking for
work. In recent years, up to one million
more people have come into the labor market
each year, looking for work, than have left
the labor market. Part of the new group
entering the labor market this year will be the
largest number of college graduates in our
history — ^some 500,000 young people, includ-
ing about 250,000 veterans. In addition, of

245

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Public Papers of the Presidents

course, a large number of high school grad-
uates will also be looking for jobs.

Furthermore, as new plants and equip-
ment have been added and supplies of raw
materials have become more ample, busi-
nessmen have been able to produce more with
the same number of workers.

Thus, our labor force has increased, our
productivity has increased, but the num-
ber of jobs has not kept pace. This empha-
sizes the importance of expanding our
economy so that new jobs will be created to
use skills and energies that are now being
wasted. It also emphasizes the importance
of making better provision for those who are
temporarily out of work.

The Congress now is well along toward
completing action on legislation to improve
the old-age and survivors' insurance and pub-
lic assistance programs. Like those pro-
grams, the unemployment insurance system
needs to be improved in the light of experi-
ence. Accordingly, I recommend that the
Congress turn its attention as soon as possible
to strengthening our Federal-State unem-
ployment insurance system.

First, I recommend that coverage be ex-
tended to about 6 million workers not now
covered. The first major deficiency in the
present Federal-State system of unemploy-
ment insurance is that it excludes large num-
bers of workers.

Coverage should be extended to employees
of small firms — those employing one to seven
workers. Workers in firms employing
fewer than eight workers were originally
left out of the Federal law because of ex-
pected administrative difficulties. In fact,
however, such employees have been satisfac-
torily covered for years under the Federal
old-age and survivors' insurance system, and
17 States have already extended their unem-
ployment compensation systems to cover
them, without encountering any serious ad-

ministrative difficulties. Many other States
are waiting for the Federal Government to
act, and have provisions in their laws which
would cover these employees automatically
when the coverage of the Federal Act is ex-
tended. No reason exists for discriminating
longer in the Federal law against such
workers.

Coverage should also be extended to Fed-
eral Government civilian employees. Al-
though the Federal Government took the
leadership in establishing a system of unem-
ployment insurance for workers in private
industry, it has not assumed the same obliga-
tion toward its own employees. Yet the
rate at which Federal workers — especially
manual workers — are separated from their
jobs is approximately as high as in private
industry. Federal workers should no longer
be denied the protection of unemployment
insurance.

I also propose extensions of coverage to
about 500,000 persons who are employed on
a commission basis, and about 200,000 work-
ers in occupations of an industrial nature
connected with agriculture, all of whom are
excluded at present. Moreover, the Federal
unemployment insurance legislation should
be extended to Puerto Rico, subject to its
acceptance by the Territorial Legislature.

Second, I recommend the establishment of
nation-wide minimum levels for amounts
and duration of unemployment benefits, in
order to correct the second major deficiency
in the present unemployment insurance sys-
tem — the inadequacy of benefits.

At present, while the Federal law includes
a number of standards which the States are
required to meet, it does not establish mini-
mum levels for benefit amounts or duration.
Maximum weekly benefits in the various
States now range from $15 to $27 for single
persons; benefits are somewhat larger for
persons with dependents in the 11 States

246

Harry S. Truman, ig^o

Apr. 6 [84]

providing dependents' allowances. With
these maximum levels, average weekly bene-
fits for the Nation as a whole were just over
$20 in 1949.

The variations among States create serious
inequities. They mean that workers who
lose their jobs in identical circumstances are
treated very differently because of the acci-
dent of geographical location. They mean
that businessmen in some States sujffer a
greater loss in markets when unemployment
occurs than do those in other States.

Furthermore, while the States generally
have increased benefits in recent years, so
that the situation is not nearly so bad as in
the case of old-age and survivors' benefits,
in most States the increases in benefits have
lagged considerably behind increases in
wages and costs of living. Thus, unemploy-
ment benefits today replace a smaller propor-
tion of a worker's regular wages than was
the case when the system was started.

For these reasons, I believe that nation-
wide minimums should be established by
law which will assure adequate benefits in
all States. The standards proposed are
these: benefits for single persons should
approximate 50 percent of normal earnings,
up to a maximum of at least $30 a week.
Additional allowances should be granted for
individuals with dependents. The propor-
tion of previous earnings replaced would
vary with the number of dependents, up to a
maximum of 70 percent of wages, or $42,
whichever is lower, for an individual with
three or more dependents.

These standards are not high. If they had
been in effect, the national average weekly
benefits in 1949 would have been just over
$24. But this would be a substantial im-
provement in an income level which, at best,
is intended to provide only for subsistence
expenses. Furthermore, uniform standards
would reduce present inequities in benefit

levels among different States. Some varia-
tion in benefit amounts would and should
remain, reflecting the differences in wage
levels and costs of living in different parts
of the country.

At present, the maximum duration of
benefits varies among the States from 12 to
26 weeks. Like the variation in size of bene-
fits, this is inequitable, and in many States
simply represents a lag in reaching what was
considered from the beginning to be a desir-
able standard, but which was originally set
low because of actuarial uncertainties. With
this wide range, the average duration of
benefits in 1949 was less than 13 weeks.
Because of the short duration of benefits,
nearly 2 million workers exhausted their
rights to benefits before finding another job.

Benefits should be available for at least 26
weeks in a year to all workers who are out
of work that long. Experience in the States
which have increased the duration of bene-
fits is that while average duration does not
rise very much, because most workers find
a new job before using up benefits, the num-
ber who use up their benefits entirely is
markedly decreased. It is estimated that,
under my proposal, the number of workers
who exhausted their benefits in 1949 would
have been only half as large as it was.

The combined effect of my recommenda-
tions for extended coverage, higher benefits,
and longer duration, would have resulted in
about $850 million more in benefits — and in
consumer demand — in 1949. The cost of
these improvements would be moderate. At
the same time that weekly benefits are raised,
the upper limit to the amount of wages taxed
should be raised from $3,000 to $4,800 per
worker, in line with the increases in wage
levels. On this basis, the combined cost of
all benefits for all States under these pro-
posals would have been about 1.2 percent of
taxable payrolls in 1948 and 2.5 percent in

247

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Public Papers of the Presidents

1949 — compared with actual costs (on the
basis of the present $3,000 wage limit) of
.9 percent of taxable payrolls in 1948 and
2.2 percent in 1949.

In most States, the rate of tax has been
extremely low in recent years — ^many em-
ployers have had to pay no tax whatever.
Some States have had to increase rates some-
what last year or this year, but in all but a
few cases, taxes are still well below the rate
of 2.7 percent contemplated when the system
was started. Under my proposals, many
States would not have to increase tax rates
to cover all the increased costs, since they
still have excess reserves. Most, if not all,
States would find no trouble meeting the
additional costs within the 2.7 percent tax
rate.

Consequently, I believe that the standards
I propose will achieve substantial improve-
ment in the unemployment insurance sys-
tem, benefiting both workers and business-
men, at very reasonable costs. As is the case
at present with respect to coverage, the Fed-
eral law should not prevent the States from
exceeding the minimum standards if they
wish to do so.

Third, I recommend that adequate meth-
ods should be required to provide benefits
for workers who move from one State to
another.

Clearly a worker who is employed in two
different States during a year is as entitled
to unemployment insurance benefits when
out of work as a worker who is employed in
only one. The States have generally recog-
nized this, and have attempted voluntarily
to work out methods for paying benefits
in such interstate cases. They have, how-
ever, been only partially successful. Inter-
state workers generally must wait much
longer to receive benefits than intrastate
workers. Furthermore, the benefits of many
interstate workers are lower than if they had

worked in only one State.

It is a difficult problem to develop ade-
quate methods for paying benefits promptly
and equitably to interstate workers in our
Federal-State unemployment insurance sys-
tem. Nevertheless, it is in the national in-
terest to encourage the mobility of labor,
since that is indispensable to economic ex-
pansion in a free society like ours. Conse-
quently, I believe that the States should be
required to adopt such methods as are neces-
sary to provide fair and adequate protection
for interstate workers.

Fourth, I recommend that both Federal
and State laws concerning fraud and dis-
qualifications should be revised and
improved.

It was a weakness in the original Federal
legislation that it did not clearly require the
States to deal adequately with the question
of fraud. Some States — without going to
uneconomical extremes in inspection and po-
licing — have instituted effective methods for
preventing or detecting fraudulent claims.
I beUeve, however, that the Federal law
should be clarified so that all States can be
required to have adequate means for deal-
ing with those few individuals who attempt
to obtain benefits through misrepresentation.

During the last few years, some States
have considerably enlarged the number of
reasons for disqualifying workers who seek
unemployment benefits and have increased
the severity of penalties for disqualification.
These excessive disqualifications have oper-
ated to prevent persons who are genuinely
out of work through no fault of their own
from receiving benefits. These over-severe
disqualification provisions, which penalize
the innocent along with the guilty, should be
corrected.

Fifth, I recommend, at this time, two im-
provements in the financing arrangements
for unemployment insurance.

248

Harry S. Truman, ig^o

Apr. 6 [84]

Since the beginning of the program, a
small part of the unemployment tax has been
collected by the Federal Government and in-
cluded in general Federal revenues. The
administrative costs of the program — both
Federal and State — have been paid out of
general Federal revenues, and have never
been as large as the Federal unemployment
tax collections. I propose that the Federal
unemployment tax be paid into a special
Federal unemployment account in the Un-
employment Trust Fund (which now in-
cludes the separate State reserve accounts
for the payment of benefits). This account
would be used exclusively to pay the cost
of State and Federal administration of the
employment security program, and the cost
of reinsurance grants, to be available to
States who encounter temporarily severe fi-
nancial difficulties.

Experience has demonstrated that the cost
of unemployment insurance varies widely
among the different States. This is mainly
due to differences in each State's economic
structure and in the incidence of unemploy-
ment in certain industries, which are be-
yond the control of the individual State. It
has become evident that a few States, while
able to finance an adequate system of unem-
ployment insurance in normal periods, may
not be able to maintain the solvency of their
unemployment funds in a period of severe
unemployment under the present financial
provisions provided in the Federal legisla-
tion. So that these States will not be forced
to increase their tax rates unduly during
periods of declining employment and pay-
rolls, the legislation should be amended to
provide assistance to such States through re-
insurance grants when their funds approach
exhaustion. This will be a major step to-
ward strengthening our Federal-State system
of unemployment insurance, since it will,
without detracting from the independence

of State action, gain some of the advantages
of pooled reserves.

A strengthened unemployment insurance
system not only will furnish more adequate
aid to those who become unemployed, but
also will do more to maintain the high vol-
ume of consumer purchasing power so nec-
essary to the welfare of the entire economy.
Thus it is a strong element in our program
to support growth and expansion in the
economy.

Our essential economic problem is to put
to sound, productive use our increasing tech-
nical knowledge and our growing labor
force. To this end, we need imaginative
and enterprising investment — in plant ca-
pacity, in new equipment, in basic resource
development. To this end, we need vigor-
ous competition and a growing number of
new businesses. To this end, we need a
stable agriculture, sensible wage-price-profit
decisions, and mature labor-management
relations. To this end, we need an expand-
ing world economy, with a productive flow
of international trade and investment.

Both private and public policies must be
directed to these purposes, and I have rec-
ommended a series of measures to the
Congress for Federal action. My present
proposal to strengthen our unemployment
insurance system is one of these measures.

I am particularly urging action at this
session of Congress on unemployment insur-
ance because State legislation must follow
the Federal amendments. Action by the
Congress this year would clear the way for
State action in 1951, when practically all of
the State legislatures will be meeting in
regular session.

But the primary reason for Congressional
action is the real need of those who are
unemployed. The unemployment insurance
system is a tried and proven means of assist-

41-355— .65-

-19

249

[84] Apr. 6

Public Papers of the Presidents

ing them. That system urgently needs
strengthening. I therefore request favorable
consideration of these recommendations at
this session of Congress.

Harry S. Truman

note: For the statement by the President upon sign-
ing the Social Security Act Amendments of 1950
on August 28, see Item 224.

The President's message was released at Key West,
Fla.

85 Remarks of Welcome to the President of Chile at the
Washington National Airport. April 12, 1950

IT IS with sincere pleasure, Mr. President,
that I welcome you to the United States.
We shall do our utmost to make your stay
among us pleasant and interesting.

I am happy to welcome you as the chief
executive of a sister republic whose citizens
have constantly been inspired by devotion to
the democratic principles which we cherish.
Your arrival symbolizes the traditional and
warm friendship that has long existed be-
tween our two countries.

It is a source of satisfaction that, in the
spirit of friendly cooperation and inter-
American solidarity, Chile and the United

States are continuing their efforts to assure
the security and peace of the world. Our
countries are motivated by the same concern
for individual freedom and human welfare.

We in the United States are honored by
your visit and heartily extend our sincere
good wishes to you personally and for the
prosperity of your people and your country.

Welcome, Mr. President!

note: President Truman spoke at 3:05 p.m. from
a speaker's stand erected at the Military Air Trans-
port terminal, adjacent to the National Airport.
President Gonzdlez Videla was greeted with a 21-
gun salute and full military honors.

86 The President's News Conference of
April 13, 1950

THE PRESIDENT, [i.] I wiU explain to you
why I was late. The President of Chile was
our guest last night at the Blair House, and
it is necessary for the President to see the
distinguished guests away from the Blair
House when they leave. We were a little
late making the arrangements, hence you had
to wait 10 minutes — which doesn't happen
very often.

I have no announcements to make. If
you have any questions, I will listen to them.

[2.] Q. Mr. President, Charles Binaggio
and Charles Gargotta were both witnesses
before a Federal grand jury in Kansas City
probing rackets. Now, 8 days after they

were killed,^ the Attorney General appar-
endy has not found legal authority to bring
the FBI into the investigation. Governor
Smith, I understand, wired the FBI for all-
out assistance, immediately after the killings.
I have two questions to ask, sir: one, do you
think this is a Federal matter; and two, will
you ask the Attorney General to send the

FBI

THE PRESIDENT. That is a matter for the

* Charles Binaggio and Charles Gargotta were
found shot to death at the First Ward Democratic
Club in Kansas City, Mo., on the morning of April
6, 1950. Both men had testified before a special
Federal grand jury in Kansas City that had been
called to investigate nationwide crime and vice.

250

Harry S. Truman, ig^o

Apr. 13 [86]

Attorney General himself to determine.
The grand jury was called in Kansas City
at my suggestion to the Attorney General
several months ago.

[3.] Q. Mr. President, are you in agree-
ment with the Attorney General, who has
been quoted as saying that all forms of
segregation are discriminatory?

THE PRESIDENT. I think we have been
working for that for some time past.
Haven't you read any of my messages on
that subject?

Q. Yes sir, but they didn't cover that, I
don't think, and

THE PRESIDENT. When you read the mes-
sages you will get the plain answer.

[4.] Q. Mr. President, have you dis-
cussed the Binaggio case with the Attorney
General?

THE PRESIDENT. I have not. It is not in
my jurisdiction. I have not discussed it with
them and don't expect to discuss it with
them.

Q. Mr. President, when Senator Lucas was
here the other day, did he discuss the crime
situation in general with you?

THE PRESIDENT. No, he did not.

Q. Mr. President, can you tell us any more
about the request that you made which
resulted in the calling of the grand jury in
Kansas City — anything on the scope of the
investigation that you ordered?

THE PRESIDENT. The scope of the investi-
gation was to, if possible, get to the bottom
of these national rackets. And the Attorney
General called the grand jury at my sugges-
tion for that purpose. The rackets are
nationwide, they are not confined to Kansas
City or St. Louis or — ^there are as many in
St. Louis as there are in Kansas City. They
are in every big city in the country, even in
Washington, if I am not mistaken.

[5.] Q. Mr. President, do you wish to
comment on the recent visit to Washing-
ton — the presence of the Secretary of the

Treasury, Mr. Cereijo of Argentina, who has
been here

THE PRESIDENT. I havc uo commeut to
make on that. I did see the Finance Min-
ister. I understand that he went away from
here highly pleased with the result of his
visit.

[6.] Q. When you spoke of calling the
grand jury at your suggestion, do you mean
just the grand jury in Kansas City?

THE PRESIDENT. Just the grand jury in
Kansas City.

Q. Weren't there grand juries in a good
many other cities at the same time?

THE PRESIDENT. Ycs. Grand juries were
already in session in several other cities, and
I suggested one be called in Kansas City and
one for St. Louis. The one for St. Louis
I don't think was called.

Q. You meant it to be nationwide in scope?

THE PRESIDENT. Yes, I meant it to be na-
tionwide in scope.

Q. You meant it to be that?

THE PRESIDENT. That is exacdy right.

[7.] Q. Mr. President, that grand jury
doesn't have anything to do with the theft
of the ballot boxes, does it? ^

THE PRESIDENT. Not this.

Q. Have you discussed that with the At-
torney General?

THE PRESIDENT. I have UOt.

Q. You realize that the Statute of Limita-
tions will run in this case?

THE PRESIDENT. I dou't kuow anything
about it.

[8.] Q. Did you have a good visit with
the President of Chile last night, sir?

^ The vault of the Kansas City Board of Election
Commissioners in the Jackson County Courthouse
in Kansas City, Mo., was broken into during the
night of May 27-28, 1947, and the contents of three
metal ballot boxes, containing ballots, poll books,
and tally sheets, were stolen. The articles had been
returned to the vault the day before after being used
as evidence by a State grand jury in a 2-month
investigation of alleged vote manipulation in the
August 1946 primary election.

251

[86] Apr. 13

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THE PRESIDENT. Very good visit. That is
quite a jump from St. Louis to Santiago,
Chile, isn't it? [Laughterl

Q. Did you take up any economic or politi-
cal subjects?

THE PRESIDENT. I did not. The President
of Chile is coming to pay an official call on
me at 4 o'clock this afternoon, and we shall
discuss any subject in which he is interested.

[9.] Q. Mr. President, Senator Taft said
this week that you had libeled Senator
McCarthy. Would you care to make any
comment?

THE PRESIDENT. Do you think that is pos-
sible? [Laughterl

Q. May we quote that?

THE PRESIDENT. YeS.

Q. Well, Mr. President, are you aware of
what Senator Taft said? He wrote a whole
column for his Ohio paper.

THE PRESIDENT. I haveu't read Senator
Taft's column, and I do not make it my
business to read political publications of peo-
ple who are running for office

Q. Would you repeat that for us?

THE PRESIDENT. ^particularly in one

statement.

Q. It was a general criticism of the admin-
istration's attitude

THE PRESIDENT. That would be natural for
Senator Taft. He is running for reelection
in Ohio, and I suppose he has something else
in mind a couple of years from now.
[Laughter'\

Q. Yes. I thought you were interested,
perhaps, in this year's campaign.

THE PRESIDENT. I am Very much inter-
ested in it.

[10.] Q. Mr. President, can we get back
to the Missouri matter, not related to

THE PRESIDENT. Anything. I told you you
could ask any questions and I will answer all
lean.

Q. Do you have any comment on Gover-
nor Smith's gasoline tax proposal — ^this is a

double-barreled question — ^would you care
to say if you voted for or against

THE PRESIDENT. I dou't think it's any-
body's business how I voted, but I was for
the increase in the tax and I voted for it
[Laughter]^

Q. Any comment on the defeat?

THE PRESIDENT. I have uo commeut on the
defeat. The people of Missouri just simply
didn't want it, I reckon. They overwhelm-
ingly thought that they didn't want it.

[11.] Q. Mr. President, I see Myron
Taylor is on the calling Ust today. Do
you intend to reappoint him to the Vati-
can?

THE PRESIDENT. I have no comment on that,
and I do not intend to comment on that
this morning. Mr. Taylor is here on private
business of his own.

[12.] Q. Mr. President, I would like to
revert to the one last question

THE PRESIDENT. Shoot all the questions
you want.

Q. In your opinion, could you construe the
murder of the two Federal witnesses as
tampering with witnesses before a Federal
grand jury?

THE PRESIDENT. I am uot iu the legal busi-
ness, and you can make your own con-
struction on that.

[13.] Q. Mr. President, Senator Tobey
says he is asking you to name a New Eng-
lander to the Interstate Commerce Commis-
sion. I wonder if you plan to do that?

THE PRESIDENT. What's that?

Q. Senator Tobey was down here and
asked you to name a New England man to
the ICC. I wonder if you plan to do that?

THE PRESIDENT. Senator Tobey made a
recommendation for the ICC, and he will
have the same consideration that several
dozen other people have that have been
recommended to me from all parts of the
United States. There are other States in
the Union as well as New Hampshire.

252

Harry S. Truman, ig$o

Apr. 13 [86]

[14.] Q. Mr. President, several groups,
including Republicans, are protesting the de-
lay in action on FEPC until the foreign
aid measure is acted on. Can you comment
on that?

THE PRESIDENT. Yes, I cau commeut on it.
The reason for the postponement was due
to the fact that the EGA appropriation
should get into the omnibus appropriation
bill in the House. Unless it is passed
promptly, it will not get into that omnibus
bill. The FEPC will be carried to the logical
conclusion, and every effort will be made to
pass FEPC prompdy without starting a fili-
buster against an international matter that
is of vital importance to the whole world.

[15.] Q. Mr. President, some months
ago you oudined for us a nationwide pro-
gram of river valley development, and you
astounded us with your knowledge of river
geography. Have any steps been taken in
the direction of fulfilling that program?

THE PRESIDENT. Surveys are being made,
and I have some preliminary reports on it.

Q. That is in the Missouri Valley

THE PRESIDENT. How's that?

Q. That is the Missouri Valley?

THE PRESIDENT. The whole Mississippi
Valley — Pittsburgh to Denver, and from
Minneapolis to New Orleans.

[16.] Q. Have you been personally re-
viewing the necessary preliminaries for our
responsibilities in the forthcoming reciprocal
trade talks?

THE PRESIDENT. Ycs, I have.

Q. Have you completed that?

THE PRESIDENT. Not quite.

[17.] Q. Do you think the first 5 years
are the hardest? [Laughter]

THE PRESIDENT. That is an easy thing for
a person to say. The first 5 years have been
rather difficult, but the country is still on its
feet. And in spite of some unemployment,
we have more people at work than ever be-
fore in the history of any country in the

history of the world. We have the most
prosperous business setup that the coun-
try has ever seen, if the Wall Street reports
are to be believed. We have the farmer in
better financial condition than he has ever
been in the history of the country, except at
the top point in 1948, 1 think it was. And
I can't see that there is any serious thing the
matter with the country as a whole. I think
it's in fine shape. In fact, the first 5 years
after the greatest war in history have been
easier on the United States than the after-
math of any other war that was ever fought
in this country, if you will read your his-
tory a little carefully.

Of course, it couldn't possibly be that the
Executive is to be credited with that situa-
tion. That just took place. It would have
taken place if we had had a moron on the
job, according to the way the general attitude
of some of the press is. [Laughter]

But I think that the President can take
credit for the situation, and that is what he
proposes to do. [More laughter]

Q. Next month sometime, Mr. President?

[18.] Q. Mr. President, I notice you say
the farmers are in the best condition, but
how about the rest of us, with the surpluses
and the high food prices?

THE PRESIDENT. I think that you get plenty
to eat, Miss May,^ and I have an idea that
you are getting a bigger salary than you ever
have gotten before in your life.

Q. Yes sir, but they don't get as much as
I do.

THE PRESIDENT. That's true, but they are
getting more than they ever got before in
their history.

Q. But there are still surpluses to be de-
stroyed.

THE PRESIDENT. If you wiU study the situa-
tion, you will find that the principle of sur-
pluses being destroyed was brought about

®Mrs. May Craig of the Portland (Maine) Press
Herald.

253

[86] Apr. 13

Public Papers of the Presidents

by your representative in the Senate from
Maine, and it was potatoes that caused most
of the trouble.

Q. Butter, eggs, wheat, corn, cotton

THE PRESIDENT. Yes, the output of every
farmer is at its greatest and farmers are
prosperous, and we have a solution for that,
a proposition which has been in the Con-
gress ever since the ist day of January of this
year to meet that problem. We have the
solution for it. If you will work for that
solution as hard as you are bringing atten-
tion to the surpluses, we will get it solved.

Q. Is that the Brannan plan?

THE PREsroENT. That is the Brannan plan.*

[19.] Q. Mr. President, getting back to
your answer a minute ago where you cov-
ered the domestic situation, I was just won-
dering if you feel that the problems of peace
are any more difficult now — I mean in the
last 20 months than they were? This is a
perennial question, and I know you com-
mented on it before.

THE PRESIDENT. I think the situation world-
wide is better than it was in 1946, and I think
there has been a gradual improvement.

[20.] Q. Mr. President, do you plan to
campaign for the Brannan plan when you go
to Wisconsin in May?

THE PRESIDENT. What's that?

Q. Do you plan to speak for the Brannan
plan when you go to Wisconsin in May?

THE PRESIDENT. I am goiug ou a nonpolit-
ical tour to dedicate some dams, and I think
my speeches will not be partisan or political.
The one in Chicago may be, but that will be
at the end of the trip.

*On April 7, 1949, Secretary of Agriculture
Charles F. Brannan appeared at a joint session of the
House and Senate Agriculture Committees, at which
time he outlined his price support plan. The plan
would substitute an income support standard for
the previous parity formula, use direct payments to
farmers when prices of certain perishables fell too
far below parity, and let those perishables sell to
consumers at supply and demand prices.

Q. Will you "dam" the Republicans a litde
bit in Chicago ? [Laughter]

THE PRESIDENT. I beg your pardon?

Q. Will you "dam" the Republicans a litde
bit in Chicago?

THE PRESIDENT. Well, you had better wait
and see. I don't like to prophesy what I am
going to say. I think you found that out
on the train.

[21.] Q. Mr. President, if you plan to
sign the new housing bill, can you give us
some idea of how soon that action might
come?

THE PRESIDENT. The bill has not come to
my desk yet. It is being analyzed by the
various departments. When it comes to my
desk, why I will let you know about it.^

[22.] Q. How about the Kerr bill, Mr.
President?

THE PRESIDENT. The Kerr bill is under con-
sideration now. It is being analyzed in the
various departments.

[23.] Q. Mr. President, is there any light
you can shed on the disappearance of the
Navy Privateer over the Baltic? ^

THE PRESIDENT. There is an investigation,
and it has been ordered by Admiral ConoUy,'^
and I can make no comment on it until we
know all the facts.

[24.] Q. Mr. President, have you re-
ceived a series of gifts and telegrams from

^On April 20, 1950, the President signed the
Housing Act of 1950 (64 Stat. 48).

®On April 8, 1950, a United States Navy patrol
plane vanished over the Baltic Sea. The plane,
carrying four officers and six enlisted men, was a
Privateer, a four-engined plane with a tail assembly
somewhat resembling that of the B-29. U.S. ofii-
cials stated that the plane left Wiesbaden Air Base
in Germany and that its destination was Copen-
hagen, Denmark. Some debris was later sighted
by search planes, but there were no survivors.

The Soviet Government subsequently stated that
Russian planes had fired upon a B~29 Flying For-
tress after it had failed to comply with orders and
had opened fire upon the Soviet planes.

''Rear Adm. Richard L. Conolly, commander of
the U.S. fleet in the Mediterranean and east
Ariantic.

254

Harry S. Truman, ig^o

Apr. 13 [86]

Congressman Heselton of Massachusetts? ®
Any comment on that, sir?

THE PRESIDENT. No commcnt.

Q. What do you do with them?

THE PRESIDENT. What do I do with them?
There's a nice, round file under my desk.
[Laughter]

[25.] Q. Mr. President, your old friend
Dr. Gallup says that right now your popu-
larity is not what it might be. Do you think
that you might do something about that on
this trip?

THE PRESIDENT. Will you tum back to
about March 1948, and read Mr. Gallup?

Q. Yes sir, I know that.

THE PRESIDENT. Well, that's about on the
same par with that.

[26.] Q. Mr. President, will you make
any talks in Ohio on your way to or from
Chicago?

THE PRESIDENT. I Can't auswcr that ques-
tion, because the details of the trip have not
been outlined as yet. Grand Coulee and
Chicago are the only definite dates.

[27.] Q. Mr. President, you said the
international situation is better now than it
was in 1946?

THE PRESIDENT. YcS, it is.

Q. Have you a reason for choosing 1946
rather than 1945?

THE PRESIDENT. I think 1 946 was about
the worst time that we had anywhere. It
was shortly after 1946 that we instituted
the program for Greece and Turkey, and the
Marshall plan came in June 1947. That was
about the worst time with which we were
faced that I can remember, except by a shoot-
ing war itself.

[28.] Q. Mr. President, going back to

®The White House had been receiving a large
number of telegrams from Representative John W.
Heselton of Massachusetts expressing his views on
agriculture and the surplus food situation. The gifts
that he had forwarded to the President were small
boxes of rice, dried peas, dried milk, shelled peanuts,
potatoes, and similar farm products.

those nonpartisan, nonpolitical speeches, do
you consider the Brannan plan a partisan and
political issue?

THE PRESIDENT. No, it is uot a partisan,
political issue. It is for the benefit of all
the farmers of the United States.

Q. Well then, Mr. President, you are
not

THE PRESIDENT. And there are lots of Re-
publican farmers that haven't been properly
educated yet, or they would be Democrats.
[Laughter]

Q. Mr. President, we didn't hear that
last

THE PRESIDENT. Wait — ^you didn't give me
a chance — ^you didn't give me a chance to
finish my answer to your question. If you
will give me a chance to answer your ques-
tion, I will be glad to do it.

I said the Brannan plan was not a partisan
program, it is for the benefit of all the
farmers of the United States, and there are
lots of Republican farmers, I think, that if
they had been properly educated they
wouldn't be Republicans.

What is the rest of your question now?

Q. Well then, with that thought, you are
not barred from speaking

THE PRESIDENT. I am not barred from
speaking on anything I want to — [Laugh-
ter] — ^but I don't intend to make any what
you might call partisan speeches on this trip.

Q. Mr. President, does that still look like
five or six major speeches?

THE PRESIDENT. Oh, I Can't answcr you,
because there are only — ^well, as I told you
awhile ago, there are three stops in Wyo-
ming to dedicate another dam — ^visit another
dam. And I can't tell you how many
speeches it will be. It will depend on how
many stops we have.

Q. A speech at every stop, sir?

THE PRESIDENT. There may be 50 or 60 be-
fore we get through. [Laughter]

Q. We'll bring the oxygen tent with us.

255

[86] Apr. 13

Public Papers of the Presidents

THE PRESIDENT. You had better bring the
oxygen tent. [Laughter]
Reporter: Thank you, Mr. President.
THE PRESIDENT. You're welcome.

note: President Truman's two hundred and twenty-
second news conference was held in his oflSce at the
White House at 10:40 a.m. on Thursday, April
13, 1950.

87 Remarks to Members of the U.S. National Commission
for UNESCO. April 13, 1950

THANK YOU very much. It is a pleasure
to have you here. I am vitally interested in
what you are doing and what you are trying
to do, and always have been.

Somebody remarked that there were a
great many of you and that the handshaking
might tire out my arm. For your informa-
tion, the last year that Mrs. Truman and I
were in the White House, she shook hands
with 50,000 people and I shook hands with
25,000, aside from those that I ran into in
1948 on the road, accidentally. The arm has
to be in good condition, for we have another
program coming up that will be somewhat
similar to that of 1948. This time we are
trying to elect a Congress that believes in
international cooperation, wholeheartedly —
a Congress that believes the welfare of the
United States demands a continuing foreign
policy that takes into consideration the whole
globe, instead of just one county or one dis-
trict or one State.

The work that you are doing is of vital
importance. Education is the fundamental
basis of freedom. The Renaissance, I think,
began the approach to our form of govern-
ment, although that form originated back
with the Hebrews and the Greeks and the
Romans, Of course, that is only one man's
opinion, as one radio commentator would
say.

Then also we are exceedingly anxious to
see that the good things of life are made
available to the poorer parts of the world.

That may sound like a worldwide WPA,
but it is nothing of the kind. My ambition
is to help these people to help themselves. I
am sure that is what you have in mind.

I am giving the United Nations, and this
organization in particular, all the support I
can possibly give as President of the United
States. I want to see you successful and I
want to see the United Nations successful,
and I honesdy believe that both of you will
be a complete success in the course of time.

We expect things to happen too fast. The
United States is noted for its go-getters. We
make plans today and try to get them done
tomorrow. In organizations such as yours
and the United Nations, if over a generation
or two generations we come close to accom-
plishing our purpose, we have made great
progress. It took the first 80 years of the
existence of the Republic of the United States
to get it established, and then we had to whip
ourselves before we got it done.

In working to get this plan of ours imple-
mented on a worldwide basis, we are work-
ing for the peace of the world. That is what
we are all working for. That is what your
educational program is for — to prevent the
killing of the young men and young women
of the generations that are to come.

One of the diflSculties of Europe is the fact
that the great countries of Europe suffered
two world cataclysms, in which the younger
generation was killed off by the millions.
That sort of loss can't be repaired immedi-

256

Harry S, Truman, ig^o

Apr. 15 [88]

ately. We don't want that to happen to us.
We have been exceedingly lucky in both the
world wars, in that we did not lose an over-
whelming number of our coming genera-
tions.

I hope you will keep up your good work,
and that you will be entirely successful. And

if I can help you, I am right here to do it.
Thank you very much.

note: The President spoke at 12:15 p.m. in his
office at the White House. The National Commis-
sion, whose function is to advise the United States
Government on the affairs of UNESCO, opened its
eighth semiannual conference at the Department of
State on April 13.

88 Veto of Bill To Amend the Natural Gas Act of 1938.
April 15, 1950

To the House of Representatives:

I return herewith, without my approval,
H.R. 1758, a bill to amend the Natural Gas
Act approved June 21, 1938, as amended.

This bill would preclude the Federal
Power Commission from regulating sales of
natural gas to interstate pipe line companies,
for resale in interstate commerce, by pro-
ducers and gatherers who are not afl&liated
with the buyers. After careful analysis and
full consideration, I believe that such an
action would not be in the national interest.

I believe that authority to regulate such
sales is necessary in the public interest be-
cause of the inherent characteristics of the
process of moving gas from the field to the
consumer. Unlike purchasers of coal and
oil, purchasers of natural gas cannot easily
move from one producer to another in search
of lower prices. Natural gas is transported
to consumers by pipe lines, and is distributed
in a given consuming market by a single
company. The pipe line companies, and in
turn the consumers of natural gas, are bound
to the producers and gatherers in a given
field by the physical location of their pipe
lines, which represent large investments of
funds, and cannot readily be moved to other
fields in search of a better price.

These characteristics of the natural gas
business impose natural limitations upon
effective competition among sellers. Com-
petition is further limited by the degree of

concentration of ownership of natural gas
reserves. While there are a large number of
producers and gatherers, a relatively small
number of them own a substantial majority
of the gas reserves. Furthermore, the de-
mand for natural gas has been growing
phenomenally in recent years, and its natural
advantages as a fuel, coupled with its present
price advantage, indicate that demand may
soon be pressing hard upon total supplieSr

Under these circumstances, there is a clear
possibility that competition will not be ef-
fective, at least in some cases, in holding
prices to reasonable levels. Accordingly, to
remove the authority to regulate, as this
bill would do, does not seem to me to be wise
public policy.

It is argued that regulation of sales of
natural gas to pipe line companies would
discourage producers and gatherers from sell-
ing their gas in interstate commerce, and
would discourage exploration and develop-
ment of new wells. This claim rests pri-
marily on the assumption that the Federal
Power Commission would apply standards
of regulation which did not take account
of the peculiar circumstances of natural gas
production — ^such as the cost of exploration
and development, including the drilling of
dry holes. I do not believe this assumption
is well-founded. On the contrary, I am con-
fident that the Commission will apply stand-
ards properly suited to the special risks and

41-355

257

[88] Apr. 15

Public Papers of the Presidents

circumstances of independent natural gas
producers and gatherers.

My confidence in this outcome is sup-
ported by the fact that, until recendy, the
Commission has no